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Contents From an experience stretching back 48 years in the business of refining premium-quality fuels, not only do we overcome adverse conditions, but we are ready to progress toward the cutting edge of business. Not only do we persevere with confidence, but we are primed to expand our business by strengthening it with robust strategies. Not only do we compete, but

we also pave the way to sustainable growth.

002 004 007 018 020 022 025 036 040 043 046 051

060 072 074 078 094 100 113 117 123 124 126

130 135 137 219 220 222

Vision and Mission Financial Highlights Message from The Board of Directors Audit Committee Report Nomination and Remuneration Committee Report Corporate Governance Committee Report Executive Summary Industry Overview Future Projects Refining and Petrochemical Operations Human Resource and Organization Structure Development Corporate Social Responsibility and Quality, Health, Safety

and Environmental Management Systems Board of Directors Organization Chart Management Shareholding and Management Structure Risk Management Corporate Governance Policy Internal Controls Corporate Information Business Description Revenue Structure Management’s Discussion and Analysis of Financial Position and Operating Results Related Party Transactions Board of Directors’ Responsibility for Financial Reporting Financial Statements Audit Fees of the Auditors 2009 Abbreviations and Acronyms Corporate Value


V I S I O N

MISSIO N

A LEADING FULLY INTEGRATED REFINING & PETROCHEMICAL COMPANY

IN ASIA PACIFIC

• To be in top quartile on performance and return on investment • To create a high-performance organization that promotes teamwork, innovation and trust for sustainability • To emphasize good Corporate Governance and commit to Corporate Social Responsibility


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Financial Highlights Operating Sales revenue EBITDA Net profit

Earnings per share Financial Total assets Total liabilities Shareholders’ equity-net Financial Ratios Interest coverage Ratio Liquidity ratio Net Debt to Equity Stock Data Closing price at end of review period Market capitalization Dividend payment Dividend yield (3) Book Value

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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL HIGHLIGHTS

million baht ” ” baht per share   million baht ” ”   times ” ”   baht per share million baht baht per share percent baht per share

2009 284,123 21,393 12,062

2008 399,125 7,949 224

2007 (1) 261,051 28,959 19,118

5.91

0.11

9.37

  137,745 66,058 71,687   10.1 2.7 0.5   42.75 87,211 2.55(2) 6.3 35.14

  132,841 69,261 63,580   3.8 1.8 0.7   23.60 48,145 2.75 11.7 31.17

  136,570 64,733 71,837   16.8 1.9 0.4   86.50 176,462 4.50 5.2 35.21

Notes: (1) Adjusted according to amended accounting policy for derivative financial instrument. (2) Includes interim dividend payment for 2009 half-year results at 1.05 baht per share, which was paid on September 17, 2008. The remaining 1.50 baht per share will be proposed to the 2010 Annual General Meeting of Shareholders for approval. (3) Calculated from the closing price at the end of the review period.

Total assets

Sales revenue

million baht

million baht

300,000

300,000

250,000

250,000

200,000

200,000

150,000

150,000

100,000

100,000

50,000 0

50,000 0

400,000 350,000

400,000 350,000

2007

2008

2009

Shareholders’ equity-net

2008

2009

Net profit

million baht

million baht

80,000

80,000

60,000

60,000

40,000

40,000

20,000

20,000

100,000

100,000

0

2007

2007

2008

2009

0

2007

2008

2009


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT MESSAGE FROM THE BOARD OF DIRECTORS

Amid the global financial crisis and its intense effects in 2009, Thaioil had shown its potential and readiness to overcome the obstacles for sustainable growth alongside the Thai society as an energy company with a track record of more than 48 years of experience. Thaioil and its subsidiary companies delivered solid results in 2009 with sales revenue of 284,123 baht and net profits of 12,062 baht. This outstanding performance is the outcome of the team effort of Thaioil Group staff in striving to the best of their abilities. Shaping this success was the strong commitment of management and the Board of Directors in setting the strategic direction and initiating measures to tackle the impact of the downturn on the refining industry while massive new capacities gradually came on stream. One of the initiatives that Thaioil has been driving during past years is the Operational Excellence project which aims to integrate the targets of each function and provide staff from every department the opportunity to participate in setting strategies and work plans. In the previous year, Thaioil also commenced commercial operation of several strategic projects and undertook a number of key activities. Some of these projects are: the opening of the new modern lorry loading facility which provides easy and fast operation to meet customer requirements; being the first to produce Euro IV standard gasoline, which has low sulphur content and environmentally friendly, followed by the launch of Euro IV diesel fuel for the first time in Thailand in 2008; taking over the solvent business in Vietnam, which is significant for being its first overseas office that provides the channel and foundation for expansion into the Indochina market further down the road; and the five-year 12 billion baht bond issue which obtained overwhelming support by investors. In the area of management, Thaioil embraced the principles and concept of excellence striving, which were adapted from the Thailand Quality Award framework. The objectives are to enhance sustainable competitiveness and to develop human resources in alignment with strategic goals and future business growth. At the same time, Thaioil continued with various activities under the competency development plan and individual career plan, which were integrated into the performance appraisal system and linked to the POSITIVE corporate values and strategic plan. The Board is extremely confident that these implemented principles and plans will contribute to solidify Thaioil’s position as a leading company as envisioned by the Board and its management. Besides managing the Company to accomplish its short-term performance goals, Thaioil continues to explore business opportunities and channels to capture long-term growth via strategic plans. The Company also remains committed to develop projects under these strategic plans through the implementation of management mechanisms which were specifically designed for these purposes. While caring for the business and ensuring its success is important, it is also vital to be responsible to the community’s and the environment’s interests. It has, therefore, been Thaioil’s practice for over 48 years to operate business with respect for the environment and regard for the health of the local community. And Thaioil will carry on with this practice as well as the implementation of projects and activities that benefit the public, a practice on which the foundation of long-term mutual growth is built. On behalf of Thaioil, the Board of Directors wishes to thank the shareholders, investors, customers, partners, public organizations, and domestic and international financial institutions for their kind support to Thaioil Group. The Board assures that the Company will be managed in strict compliance with the principles of transparency, ethics and good corporate governance. At the same time, we continue to be committed to corporate social responsibility, to strengthen Thaioil’s capabilities through continuous development toward sustaining success and advancement.

MESSAGE FROM THE BOARD OF DIRECTORS

Somnuk Kyavatanakij Chairman of the Board of Directors Thai Oil Public Company Limited

Surong Bulakul Chief Executive Officer Thai Oil Public Company Limited


Refining Products, Refining Quality

Advanced refinery with state-of-the-art technology, efficient operation, lengthy experienced and highly skillful workforce, international standard management - All of these intended that every drop of oil from our refinery is quality refined by experience.


Setting Standards, Building Strong Foundations

We relentlessly pursue excellence in all business sections by developing management systems of the highest standards, reducing operating costs, adding product value, leading the organization to the next level to secure strong foundations.


Progressing with Systems, Advancing with Strategies Planning the development of alternative energy, creating value added from the production process, expanding business chain are just parts of our growth strategy of our business.


Thinking Efficiently, Striving for Effectiveness

Good strategy without understanding and implementation would be useless. That is why we encourage our staff to play a role in strategic plan, which ultimately drives the organization’s success.


Creating Confidence, Sustaining Reliability

We are confident in our continuous and stable growth because we are committed to good governance and social responsibility. This underpins the way we conduct business, which are major contributors to our sustainable growth.


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT AUDIT COMMITTEE REPORT

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Audit Committee Report The Audit Committee comprises of four members, all of whom are independent directors: 1. Mr. Manu Leopairote Chairman 2. Mr. Krairit Nilkuha Member 3. Mr. Chaikasem Nitisiri Member 4. Mr. Utid Tamwatin Member All the members are professionally qualified in accounting, financing, economics and law, and have well-formed experience in the petroleum, petrochemical and energy industry. Mr. Manu Leopairote, the Committee Chairman, is knowledgeable and experienced in accounting and financing and possesses necessary qualifications to perform his duty in reviewing the integrity of financial statements as established by The Stock Exchange of Thailand (SET). During 2009, the Audit Committee held seven meetings with relevant senior management members, Manager of Internal Systems Audit Section, and the external auditor. The Committee also met once with the external auditor without the presence of management to independently discuss significant issues relating to the preparation of financial statements and disclosure of information crucial to users of the financial statements and to be reported on the audit results, observations made, and problems and obstacles encountered during the audit. The Audit Committee performed the duties assigned by the Board of Directors, as defined in the Audit Committee Charter and consistent with stipulations of SET, which are: review of financial statements, review of related party transactions, review of risk management, and review of the internal control system. The results of the reviews by the Audit Committee can be summarized as follows: Financial Review: The Audit Committee jointly reviewed the quarterly and year-end financial statements for 2009 with senior management and the external auditor. The financial statements of Thaioil and subsidiary companies were found to have been prepared according to generally accepted accounting principles. The accounting records and financial statements are correct, reliable with adequate and complete disclosure of data and were issued within the deadline set by the Securities Exchange Commission (SEC) and SET. Related Transaction Review: The Audit Committee reviewed the related party transactions in 2009 of Thaioil and subsidiary companies which could potentially create conflicts of interest between the company and stakeholders. The review found that information was sufficiently disclosed. The related party transactions were actual transactions in the normal course of business with fair and appropriate price. Thaioil had complied with the good corporate governance policy and the audit committee was confident that the company had conduct business based on commercial condition and criteria set by SET. Risk Management Review: The Audit Committee reviewed the annual risk management plan and the quarterly progress on risk management to ensure that associated risks were managed to acceptable level. The review in 2009 found that the Board of Directors and management made risk management a priority and acted in accordance with the

risk management policy. Risk factors were assessed and plans were established to consistently minimize the level of key risks in each department in order to mitigate the potential impact on the Company’s business. A reputable independent consultant had been engaged for three consecutive years since 2007 to assess the quality of risk management system. Following the improvements made by the Company in managing risks in order to raise the effectiveness according to the recommendations of the assessor, the result of the risk management assessment for Thaioil and subsidiary companies improved each year. Internal Control Review: The Audit Committee reviewed the adequacy of the internal control systems of Thaioil and subsidiary companies in 2009. The Committee is of the opinion that Thaioil had strictly complied with the corporate governance policy which resulted in an internal control system that is satisfactorily effective and appropriate, with no anomaly found. Through close monitoring, management had ensured that items highlighted in the review report were corrected. The internal control system was modified in response to the changing circumstances so that Thaioil and subsidiary companies could achieve the set objectives. In 2009, the Audit Committee approved the draft internal audit charter prescribing the policies and principles as well as the approach in auditing the Company’s key systems. In addition, the Audit Committee conducted the review to ensure that the Company strictly adhered to the Securities and Exchange Act, the requirements of SET, and other laws relevant to Company’s business for maximum efficiency and effectiveness. The review further ensured that treatment of Company’s stakeholders were fair, transparent and withstood review, according to good corporate governance principles, in order to generate the investors and stakeholders trust. The Audit Committee proposed that the Board of Directors seek approval from the 2010 Annual General Meeting of Shareholders to appoint Mr. Chareon Phosamritlert, Certified Public Accountant Registration no. 4068, Mr. Winid Silamongkol Certified Public Accountant Registration no. 3378, or Mr. Vairoj Jindamaneepitak, Certified Public Accountant Registration no.3565, of KPMG Phoomchai Audit Ltd., as external auditor of the Company in 2010 February 19, 2010 On behalf of the Audit Committee (Manu Leopairote) Chairman of Audit Committee Thai Oil Public Company Limited


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT NOMINATION AND REMUNERATION COMMITTEE REPORT

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Nomination and Remuneration Committee Report The Board of Directors had established the Nomination and Remuneration Committee since 2005. The objective is to have the Independent Committee to perform the duty of reviewing the criterion and process for identifying suitably qualified nominees for directorship and recommending as potential nominees to the Board for submission to the shareholders meeting. It is also the duty of the Committee to identify new nominees to replace resigned directors, to consider the suitable remuneration for directors and recommend to the Board of Directors for submission to the annual general meeting to approve each year, and to consider the remuneration for the chief executive officer and recommend to the Board of Directors for approval. The Nomination and Remuneration Committee appointed by the Board of Directors consisted of three non-executive directors, most of whom are independent directors: 1. Mr. Nontigorn Kanchanachitra Chairman (Independent) 2. Ms. Puongpech Sarakun Member (Independent) 3. Mr. Prasert Bunsumpun Member During 2009, the Committee carried out duties according to the Nomination and Remuneration Committee Charter and held four meetings with full attendance by the members. Details on meeting attendance are provided on Page 89. The highlights of the meetings are: 1. Evaluated performance and considered the suitable remuneration adjustment for the Managing Director for his performance in 2008. 2. Identified suitable nominees for submission to the Board of Directors and the shareholders meeting to consider appointing as directors to replace the directors who have completed their terms in 2008. 3. Determined the remuneration for directors in 2008 by applying the remuneration criterion appropriate to the duties and responsibilities of directors. Remuneration was linked to the overall performance of the Company, comparable to other listed companies within the same business sector that have the same level of dividend payment to shareholders. 4. Identified suitably qualified directors for appointment as the member of the Audit Committee, Nomination and Remuneration Committee and made recommendations to the Board of Directors to consider appointing to assume the vacated positions after the annual general meeting in 2009. 5. Arranged for the election of the Chairman of the Nomination and Remuneration Committee. At the Committee Meeting No. 3/2552 on September 25, 2008, it was resolved to appoint Mr. Nontigorn Kanchanachitra as Chairman of the Nomination and Remuneration Committee to assume the vacated position.

6. Identified qualified nominees from both inside and outside the organization to assume the vacated positions of director and managing director due to the retirement of the incumbent Managing Director on September 30, 2008 for recommendation to the Board of Directors to consider the appointment. 7. Considered and recommended the suitable organizational structure for better alignment with the business changes and requirements of Thaioil and subsidiary companies. 8. Performed the duties according to the resolution of the Board of Directors which assigned the Nomination and Remuneration Committee to determine the remuneration and employment contract for the new Chief Executive Officer. 9. Supported the Company in providing the opportunity for minor shareholders to propose nominees for appointment as Company directors prior to the 2010 Annual General Meeting. 10. Evaluated the performance of the former Managing Director according to the performance and his terms from January to September 2009. February 19, 2010 On behalf of the Nomination and Remuneration Committee (Nontigorn Kanchanachitra) Chairman of the Nomination and Remuneration Committee Thai Oil Public Company Limited


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE GOVERNANCE COMMITTEE REPORT

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Corporate Governance Committee Report The Board of Directors appointed the Corporate Governance Committee which is composed of four qualified members: 1. General Prayut Chan-O-Cha Chairman (Independent) 2. Mr. Apisak Tantivorawong Member (Independent) 3. Mr. Banphot Hongthong Member (Independent) 4. Mr. Prajya Phinyawat Member The Company recognizes the importance of good corporate governance in supporting and promoting the sustainable growth of Thaioil and the benefits it brings to the Thai public. Good corporate governance principles have, therefore, been adopted to serve as guidelines in conducting business and form part of the corporate mission that must be conducted in order to achieve the Company’s vision. The Corporate Governance Committee has been assigned with the duties to provide support to the Board of Directors in establishing policies and guidelines to improve various work process relating to business management of the Company and its subsidiaries by adhering to the principles of good corporate governance being widely accepted at the international level. These principles apply to the Board of Directors, executives and all employees. The objective is to create an organizational culture that adheres to fairness, equitable treatment to all stakeholders, and to perform duties for the best interests of the Company with honesty, transparency, and withstood scrutiny. During 2009, the Corporate Governance Committee held three meetings. The outcome of the committee performance according to the roles, duties, and responsibilities set out in the Corporate Governance Committee Charter can be highlighted as follows: 1. Provided opinion and approved the Company’s corporate governance development plan for 2010. 2. Approved the revision to the Corporate Governance Committee Charter in order to comply with the guidelines of the Office of the Securities and Exchange Commission (SEC) and The Stock Exchange of Thailand (SET). 3. Approved the form and guidelines to report the list of conflict of interest for Directors and Executives before submission to the Board of directors for approval. 4. Advised on the approach to organize Thaioil Group CG Day and host PTT Group CG Day. 5. Provided advices and observations in correcting the weakness points as found by the assessment of the Company’s corporate governance. 6. Considered and approved the revised performance assessment form for the Board of Directors for 2009. 7. Provided advice in improving the organization of the 2009 Annual General Meeting, which resulted in the Company receiving a higher assessment rating than in 2008. Activities and projects which were implemented to promote and support good corporate governance categorized by each group of stakeholders are as follows: Shareholders, Investors and Analysts: The Company provided opportunity for minor shareholders to visit the refinery in order to promote a better understanding of the Company’s operation and how business is conducted. Quarterly meetings with analysts were held for performance briefings, of which the information was also shown on the Company’s website to enable equal access by all shareholders. In addition, the Company also set up exhibition booths at various events to share news, information and knowledge with investors.

Employees: The Company organized the annual Thaioil Group CG Day which aims to promote and stimulate employees’ awareness on the significance of corporate governance principles and commitment to ethical principles in performing work. Corporate governance principles also form part of the information briefed to new employees during orientation program. Customers: The Company undertook the annual survey of customer satisfaction in order to improve service in addition to the arrangement of regular meetings with domestic and international customers. In 2009, the Company strictly complied with the terms of product sale and purchase agreements and there were no disputes with customers. Partners/Creditors: Driven by the commitment to ensure that every business partner of the Company is treated equitably, Thaioil undertook several activities in the past year to promote this goal. For instance, restructuring of procurement section, rectifying the terms and conditions of the purchasing and hiring references for clarity, conciseness, transparency and fairness. In addition, the Company made truthful and honest reports on the financial status to all creditors at quarterly meeting. Community and Environment: Managing business with due consideration for the safety of society, communities and the environment, as well as the quality of life of the public have been Thaioil approach for 48 years. Moreover, Thaioil has implemented projects related to health, education, learning, culture and the environment to foster good relations with the community and its surroundings. For instance, the Company built the health and learning center, awarded scholarships, made the refinery accessible to students as a source of acquiring knowledge either through summer training programs or cooperative projects with educational institutions, organized activities aimed to preserve the environment, and supported energy conservation projects through leading energy foundations. Government Agencies and Related Organizations: The Company consistently assessed for its compliance with the law in various aspects. To prevent any wrongdoing, new relevant legislation is communicated to employees. In addition, the Company fosters a culture in which employees are responsible to ensure that their actions are abided by the laws. In December 2009, Thaioil was assessed as an “excellent” corporate governance company as per the assessment conducted by the Thai Institute of Directors (IOD). This was an improvement from the rating of “very good” which was received in 2008. The achievement reflects the efforts and commitments of the Company and all employees in raising the standard of corporate governance and building trust for the investors and stakeholders. Thaioil will continue to conduct business for the best and equitable interests of all stakeholders through ethics, transparency and performance that can withstand scrutiny. February 19, 2010 On behalf of the Corporate Governance Committee (General Prayut Chan-O-Cha) Chairman of the Corporate Governance Committee Thai Oil Public Company Limited


THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT EXECUTIVE SUMMARY

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Executive Summary 2009 Highlights Strong business structure contributes to improved overall performance

The performance of Thaioil and subsidiary companies reached a very satisfactory level in fiscal year 2009 despite the economic downturn. Thaioil and subsidiary companies posted net profits of 12,062 million baht, a significant rise from 224 million baht in 2008. This was in part due to the integrated businesses management of Thaioil Group, which provided flexibility of operation, allowing maximum benefits to be realized. In view of this, Thaioil is in a position to report strong Gross Integrated Margin (GIM) of refinery, aromatics and lube base oil businesses. Competitive operating costs and additional earnings from related businesses in power generation, solvents product and marine transportation, all are solidify revenue structure of Thaioil and subsidiaries. In addition, the Company made it a priority to enhance the quality and processes of Enterprise Risk Management (ERM) under the supervision of top management and the Board of Directors. The efforts were successful as it has earned ratings improvement in each year’s assessment of Thaioil Group’s ERM by the third parties. Another key priority is improving corporate governance, an area which Thaioil has been awarded a rating of “excellence” in the survey of corporate governance practices by Thai Institute of Directors (IOD) in December 2009.

Maximum utilization through integrated operational structure among the Group focusing on Operational Excellence program to cope with volatile global economy

The Operational Excellence program laid the foundation for enhancing the integration and linkage among all functions within Thaioil Group. The Operational Excellence workshops are held every quarter to communicate movements and trends in the petroleum

petochemical industries and related businesses to Thaioil Group employees. These workshops, at which ideas from employees are encouraged and will enable every unit to participate in setting strategies and work plans in order to systematically and integrally ensure production efficiency improvement, sales growth, additional profit generation and operating cost reduction. Ultimately, this will contribute to the Company’s achievement of set objectives or targets. In 2009, Thaioil established strategies and work plans to maintain competitive capabilities and operating flexibility at the highest levels in order to respond to rapidly changing market conditions, while managing to gain opportunities for new market penetration faster than other operators. This enabled Thaioil Group to maximize production at its full capacity with total integrated intake at 286,000 barrels per day or 104 million barrels per year. Thaioil was able to achieve this despite the regional refinery industry being under pressure from surplus capacity regionally which forced many refineries to reduce capacity utilization rates. Furthermore, Thaioil’s business is made up of a network linking the oil refinery, aromatics plant, lube base oil plant, solvent plant, power plant, and product tankers. This forms a solid yet flexible revenue structure that is enough to withstand the volatility of the economy and world market. Thaioil Group companies are therefore able to report gross integrated margins of US$ 6.1 per barrel (up 42%) and group EBITDA of 21,393 million baht (up 169%).

Proactive marketing strategy to maintain customer satisfaction and provide more options to the customer Thaioil Group recognizes the importance of developing the skill to forecast industrial market conditions and


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trends, a key component in operating its oil refining and petrochemical business with optimum effectiveness. To achieve integration and linkage, the Company reorganized the Group’s commercial planning and commercial functions to be fully operated under Area Production Unit (APU), which aligns with the structure of the manufacturing functions. This overall structure enables Thaioil Group to operate at the highest flexibility in adjusting the production plan to quickly respond to changes in marketing plan which are triggered by ever-changing market conditions. Thaioil’s operating potential and capabilities were heightened in 2009 despite the economic and financial crisis impacting on the majority of corporations around the world. On the contrary, the Company saw it as a crucial period to maintain its domestic and overseas markets as well as exploring new markets in Indochina and the Middle East. One of key strategies that contributed to the success of our proactive marketing activity was the opening of the new lorry loading facility, which provides cost-effective, easy and fast loading of products onto trucks for delivery to customers. The project is consistent with the strategic target of gaining entry into new markets in Indochina because the new lorry loading facility has increased the volume of products distributed to Indochina by nearly 20%. In addition, being the first producer of high-quality EURO IV grade diesel fuel and gasoline and succeeding in expanding sales channels through the new customer base for the solvent retailed business in Thailand and Vietnam. This represents another step for Thaioil in proactive marketing strategy.

Production of high quality EURO IV grade oil products and ethanol production business which

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT EXECUTIVE SUMMARY

support the government’s policy in developing clean fuels and alternative energy to reduce pollution and enhance the quality of life of the Thai society

After producing diesel fuel to EURO IV standard for distribution to customers in 2008 which allowed us to expand the market share in Thailand. The Company developed and modified the production process to produce and market gasoline under EURO IV specification in June 2009, becoming the first refinery to meet the government’s energy policy before the deadline of 2012. In addition, this EURO IV product would not only support our customers in strategizing their retail market positions, but also contribute to the reduction of air pollution for Thai public. Thaioil group realizes the importance of alternative energy inclusive of ethanol. Our target was to expand the ethanol business through joint venture projects to produce ethanol from sugar molasses and/or cassava in support of the country’s gasohol project which will serve the government policy with respect of gasohol usage promotion. In 2009, the 200,000-liter-per-day ethanol plant managed by Maesod Clean Energy (in which Thaioil Ethanol holds a 30% shareholding) commenced commercial operation since Q1/2009.

Successful implementation of strategic plan and expansion into energy consultancy and business expansion overseas Thaioil Group’s vision is to strive to be a leading fully integrated oil refining and petrochemical company in Asia Pacific. Not only did we achieve expansion and create value added businesses under Organic Growth and Value Chain Enhancement strategies, we also made it a priority to penetrate the alternative energy business and the energy consultancy business as well as expand to overseas.

In the previous year, Thaioil Group formed Thaioil Energy Solutions Co., Ltd. (TES)* to operate a high level consultancy service in an area of energy solutions business. TES started off by providing services to PTT Group and Thaioil Group as well as general industrial customers in Thailand and abroad. Entry into a new business with high value added is an important step for Thaioil and the strategy is to make use of the core competencies of skilled and experienced personnel collected from more than 48 years of operations. The business will also promote work standard in the Thai industry. In overseas business expansion, Thaioil was successful in the acquisition of the solvent distribution operation in Vietnam in November 2009. Expanding the retail base of the solvent business to Vietnam is a key strategy in Thaioil Group’s business growth and channeling the Group’s products to Asian customers. In addition, Thaioil is uniquely positioned to offer comprehensive service to customers by utilize the new lorry loading facility and product tankers of Thaioil Marine to effectively meet logistics needs of transporting products to local and overseas markets.

Human resources management and organizational development toward a high performance organization

Apart from developing the competitive capacity and implementing business strategies, Thaioil recognizes that success depends on a qualified and competent workforce with corporate structures designed to meet business growth needs. Careful attention was therefore given to developing employees in their line of profession, promoting POSITIVE values, shaping an accepting attitude to change, developing work systems

027

and knowledge management to draw out the full potential employees. Another important component is developing effective teams and fostering teamwork. The important thing is to give 100% to the task at hand, to value work, to create for oneself work standards, and to nurture endurable relationships. Following the introduction of the performance management system, last year, Thaioil further enhanced the Individual Development Plan (IDP) that is suitable for its business conditions and corporate culture. Thaioil also created an environment for optimizing development and productivity management, which boosted employee morale and cemented their bond with the Company. This will help attract and retain talented employees, which will support Thaioil succeed in its business expansion targets.

Total Quality Management (TQM)

The development of work standards and improvement of work processes are important to the Company because they promote added value creation for Thaioil Group. Thaioil has merged quality management with continual customer and stakeholder focus to build competitive advantage. Its aim is for every function to develop systematic processes linked to the strategic mission in order to ensure that the organization works toward the established target and vision. In 2009, Thaioil submitted the TQA report and developed an intergrated management system. As a result, the Company becomes the first refinery in Thailand to be certified by Management System Certification Institute (Thailand) for its Integrated Management System (IMS).

Remark * The company’s name was changed from Thaioil Energy Company Limited to “Thaioil Energy Solutions Company Limited” in accordance with approval from the Extraordinary Meeting of Shareholders no.1/2009 on December 3, 2009.


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT KEY MILESTONES IN 2009

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Key Milestones in 2009

January • Thaioil issued a 5-year 12 billion baht debenture to institutional and public investors. • Independent Power (Thailand) achieved ISO 14001 certification.

March • Thai Lube Base was awarded Thailand Quality Class (TQC) in recognition of the company’s efforts towards achieving world-class business excellence, which uses the same criterion as the Thailand Quality Award (TQA), a world-class award. • Thai Paraxylene signed a sale and purchase agreement for 12,000-24,000 tons of benzene with Kuwait’s The Kuwait Styrene Co. • TOP Solvent signed the Declaration of Support for the Responsible Care Global Charter, which commits to corporate social responsibility for advancement of product management, sustainable development and integrated management that are consistent with the international strategic plan for products.

February • Thai Paraxylene signed a sale and purchase agreement for 80,000 tons of paraxylene with Japan’s Mitsubishi Corporation.

April • Thaioil, Thai Lube Base, and Independent Power (Thailand) were presented with the EIA Monitoring Awards 2008 for compliance with measures in the Environmental Impact Assessment reports and for outstanding environmental management from the Office of Natural Resources and Environmental Policy and Planning. • Thai Paraxylene signed an MOU committing to the project promoting corporate social responsibility among industrial operators introduced by the Department of Industrial Works. • Thai Paraxylene entered a sale and purchase agreement for 36,000 tons of benzene and 12,000 tons of toluene with Japan’s Mitsui & Co. Ltd.

May • Thaioil Marine took delivery of Thaioil 11, a 7,000 dwt clean product and petrochemical tanker in China. • Thaioil Group, Laem Chabang Municipality, and Kasetsart University, Sriracha Campus, signed an MOU for cooperation on the project for biodiesel production by the community aimed at

June • Thaioil became Thailand’s first and only producer of gasoline 95 octane EURO IV standard 30 months ahead of the government deadline. • TOP Solvent signed respective agreements with SC Carrier and Nuntiya Limited Partnership for transportation of solvents by truck.

reducing the used of vegetable oil, and also presented 400,000 baht to procure a biodiesel machine (with a capacity of 75-250 liters per day). • Thai Lube Base succeeded in developing the formula for new grades of asphalt and bitumen, i.e. polymer modified asphalt and bitumen 40-50.

August • Thaioil and Thai Paraxylene were awarded the golden and bronze Zero Accident Awards for achieving 10 million man-hours and 1,000,0002,999,999 million man-hours without lost-time accident respectively. • Thaioil Energy Solutions signed an agreement with IRPC to provide employee development training service.


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT KEY MILESTONES IN 2009

September • Thaioil became Thailand’s first refinery to produce and distribute gasoline 91 octane to EURO IV standard. • Thai Paraxylene was presented with an award and certificate for compliance with the corporate social responsibility standard for industrial operators from the Department of Industrial Works (CSR - DIW).

October • Mr. Surong Bulakul was appointed as the Chief Executive Officer of Thaioil. • Independent Power (Thailand) hosted “the 5th Asia Pacific V 94.3 A / V 84.3 A User Group Conference 2009” attended by Siemens customers of V 94.3 A and V 84.3 A gas turbines in Asia Pacific. • Thai Paraxylene signed a sale and purchase agreement for 70,000-100,000 tons per year of paraxylene with Japan’s Mitsubishi Corporation. • Thai Paraxylene received certification for compliance of the corporate social responsibility standard for Thai businesses from the Department of Labour Welfare and Protection, Ministry of Labour, for performance meeting every Thai labor standards in terms of safety, occupational health, and employment conditions relating to rights and labor protection.

031

November • Thaioil won Board of the Year Award for 2008/09, reflecting the quality of the work of the Board of Directors and the effectiveness in protecting the interests of shareholders by overseeing that the Company is managed properly and creates long-term value for the shareholders. • Thaioil and TOP Solvent completed ownership transfer of the solvent distribution business in Vietnam from Shell Group and which will be managed through TOP Solvent, a shareholder in Top Solvent Vietnam. • Thaioil became Thailand’s first refinery to achieve certification for the integrated management system from Management System Certification Institute (Thailand) in recognition of the integration of management processes of the entire refinery.

December • Thaioil was assessed by Thai Institute of Directors (IOD) to be “excellent” in corporate governance. • Thaioil held a chanting ceremony for the Company’s Buddha image, presided over by His Holiness Somdet Phra Buddhacharya (Upasena Mahathera), President of the Executive Committee for the Supreme Patriarch. • Thai Lube Base held the foundation stone laying ceremony for the new Treated Distillate Aromatic Extract (TDAE) unit (with a capacity of 6,000 tons per month) to produce polycyclic aromatics with 3% toxicity. • Thai Paraxylene became the country’s first petrochemical plant to receive certification for the integrated management system from Management System Certification Institute (Thailand) for integration of management systems of the entire plant. • Independent Power (Thailand) was certified for TIS 18001.


Market Review 2009 Industry and Economy in 2009

120 90 60

2008

Dec

Nov

Oct

Sep

Aug

Jun Jul

Apr May

Mar

Feb

Jan

Dec

Nov

Oct

Sep

Aug

Jun Jul

Apr May

Feb

Mar

0

Jan

30

2009 Jet Fuel

Diesel Fuel

Gasoline

Dubai Crude

Fuel Oil

Domestic Petroleum Product Market in 2009

The global economic crisis also affected the economic growth in Thailand. The Thai economy contracted 2.8% in 2009 resulted in the slowing down product demand. Jet fuel, in particular, adjusted downward by 6% due to impact of the domestic political tension and H1N1 flu on tourism. Fuel oil demand also decreased with more power plants turning to natural gas. However, gasoline and diesel fuel consumption grew 6% and 5% respectively from 2008. This was due to the government’s policy to stabilize prices as world oil prices plunged during the beginning of the year. The LPG consumption was up 7% and additional imports were needed.

Fuel Oil

Diesel Fuel

Jet Fuel

Dec

Nov

Oct

Sep

Jul

Aug

Jun

Apr

May

2008

Mar

Feb

Jan

Dec

Nov

Oct

Sep

Aug

Jul

Apr

May

800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0

Jun

2008 and 2009 Domestic Petroleum Product Demand

Barrels/day

Feb

Crude prices dropped very low as 2009 opened with world oil demand shrinking and global oil inventories adjusting upward to reach record highs in many years. Meanwhile, concerns over the economic downturn and waning investor confidence were drawing funds away from oil and stock markets to the lower risk money market. In Q2, oil prices rebounded as the global economy showed improving prospects after fiscal stimulus packages were announced by governments around the world. Investor confidence returned and funds were moved to money and oil markets in the belief that oil prices would rise in the future and gains would be made from the investment. The rise in oil prices to the level of US$ 70 a barrel during this period was not due to fundamentals as demand was still weak (down 1.35 million barrels per day from the previous year) and inventories were high. Other factors which had impacted oil prices, such as political tension in oil-producing countries and the Atlantic hurricane season, did not have any substantial effect. The higher crude prices early in the year were due to investor speculation, pulling up the prices of petroleum products as well but at lower rates than crude prices. This was because prices of petroleum products were directly impacted by fundamentals (market demand and supply). There was little demand in the market and, therefore, the difference between crude and product prices was much lower than in 2008.

150

Mar

Crude and Petroleum Products in 2009

2008 and 2009 Crude and Petroleum Product Prices

180

US$/barrel

The world faced a severe economic downturn in 2009 due to the financial crisis that began in September 2008 in the United States. Numerous financial institutions worldwide suffered huge losses with several major companies around the world closing down operations or being merged. Private investment stopped or was delayed while spending and consumption contracted due to decreased consumer earnings as well as increasing unemployment rate. All these factors have impacted on investor confidence in the market and led to rapid declines in stock market indices and crude oil prices by the end of 2008 and Q1/2009. From Q2/2009, economies in a number of countries returned to growth again after global governments injected massive amounts of money into the financial system to stimulate the economy. Central banks also reduced policy interest rates to record lows. The efforts succeeded in stimulating domestic investment and consumer spending, easing concerns of economic recession and rebuilding investor confidence.

033

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT MARKET REVIEW 2009

Jan

032

2009

Gasoline

LPG

Source: Energy Policy and Planning Office

The total local refinery capacity in 2009 was 939,438 barrels per day. This was 2% higher than 2008 due to the refinery expansion of PTT Aromatics and Refining. In 2009, Thaioil remained the major producer of refined product which contributed to 29% of the country’s total output.


THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT MARKET REVIEW 2009

035

Market Share of Thailand Refinery Capacity

29%

Solvent Market in 2009

Thaioil

15% PTTAR

9%

Bangchak

1%

16% Star Petroleum Refining

15%

15%

IRPC

Clean and Petrochemical Tanker Market in 2009

Esso

Others

Total 939,438 barrels per day Source: Energy Policy and Planning Office

Aromatics Market in 2009

The economic crisis that spread around the world was a major contributor to the severe contraction of aromatics demand, causing the market to experience volatility in 2009. In Q1, the negative spread between benzene and feedstock prices influenced several regional plants to lower operating rates. Paraxylene demand, on the other hand, recovered quicker than expected and tightened supply, pushing prices very high up until July. However, aromatics prices swiftly fell by the end of Q3 as the market was supported by additional supply after four new plants in China and one in the Middle East came on stream and reached full capacity. Prices rose again in Q3 when feedstock supply became tight after several refineries cut down utilization capacity. In addition, there was naphtha shortage, which drove up prices of the feedstock and prompted aromatics prices to rise at the year ended.

Lube Base Oil Market in 2009

The market was heavily affected in 2009 by the economic crisis which depressed in the demand, especially in manufacturing industries of automobiles, parts, tires and related products, paints and coatings, adhesives, printing inks, and chemicals. In addition, some operators had moved their operation base overseas. Production in Thailand, though, began to recover in Q2 as orders returned. On the supply side, production in neighboring countries increased to compensate imports while demand subsided. Domestic producers were, therefore, forced to export to ease the intensely competitive prices in the local market.

The global recession which set off in the latter half of 2008 depressed the demand for lube base oils and continued until the first half of 2009. When the economy began to recover, lube base oil consumption improved in the second half. Thailand’s demand grew 4% from the level in 2008 while supply dropped, caused by the shutting down of several unprofitable plants in the US and Europe. Western demand dwindled significantly and products were moved to Asia where demand remained strong. However, transportation over a long-distance removed US and European plants from competing with Asian operators. This was how Western plants were forced to close down, raising lube base oil prices in the second half of 2009.

The freight rates for clean products and petrochemicals fluctuated in the 2009. There was not significant impact from the economic crisis in Q1 with a steady demand for tankers, particularly from China as a result of the government’s stimulus programs combined with huge petrochemical stockpiling after the New Year holidays. Subsequently, rates dropped as tanker demand fell amid the industrial slowdown. Q2 and Q3 also saw significant new tanker tonnage with supply overtaking demand and pressuring down freight rates. However, the recovering economy in Q4 results to a positive trend of the demand for clean and petrochemical tankers.

Ethanol Market in 2009

In 2009, there were 17 new domestic ethanol plants (total capacity of 2.6 million liters per day) while demand rose to 12.2 million liters per day, from 9.3 million liters per day in 2008, due to the government’s supportive policy. However, in Q3 and Q4, supply was tight because of the high price and limited volume of molasses, feedstock for the production of ethanol. At cassava-based plants, operations were in the initial phase and production had not yet reached its full capacity. Consequently, the local price of ethanol was extremely high during this period.

Electric Power Industry in 2009

The domestic usage had dropped since the economic slowdown at the end of 2008 up until mid-2009. After hat point, consumption was on the rise again, reflecting the economy to recover. The total electricity consumption in 2009 (a period of 11 months) was 123,761 megawatt-hours, up 0.93% from 2008. The consumption by the residential sector grew 5.5%, by the industrial sector down 2.7%, and by the business sector down 2.8%. Electricity generation in 2009 (as of October) totaled to 29,212 megawatts, down 2.3% from the previous year. Electricity Generating Authority of Thailand accounted for 49% of total generation, independent power producers 42%, small power producers 7%, and imports from neighboring countries 2%. Natural gas continued to be the major energy source at 71%, coal and lignite at 20%, hydro 5%, fuel oil 0.5%, imported energy sources 1.5%, and other energy sources 2%. The automatic adjustment mechanism (FT tariff) was adjusted upward by 14.85 satangs per unit to 92.55 satangs

per unit.


036

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT INDUSTRY OVERVIEW

037

Industry Overview Market and Global Economy

The global economy will return to trend growth rate of 3.9% in 2010. The International Monetary Fund (IMF) predicts that industrialized economies will expand 2.1% while the recovery of developing countries, led by China and India, will rapidly grow at a 6% rate. The banking sector, however, will remain vulnerable to losses from bad loans. For this reason, governments need to continue their stimulus efforts as economic recovery could falter if the support is withdrawn too soon. In addition, high unemployment rates in 2010 will constrain consumer spending, resulting in a slower economic expansion. The IMF expects unemployment rates in advanced countries to maintain the current high levels throughout the year. This year, policymakers around the world will have to address the question of whether they want to continue or end the stimulus package. Proceeding with a new round of supportive measures to drive the economy into real recovery will push public debt even higher. On the other hand, slowing down bailout funds to the banking sector and the public, by reducing cash injections and raising interest rates will risk a drag in the economy and problems in the financial sector could re-emerge. Developing nations, particularly China and India, are expected to wind down financial policies ahead of industrialized countries, having handled the fallout of the economic crisis better. Developed countries, which endured deeper recession, are likely to maintain their respective stimulus policies in order that economic recovery will be more sustainable. There will be no inflation concerns to pressure governments into exiting stimulus measures. It is expected that the US will be the last country to raise interest rates (in mid-2010), which will weaken the US dollar in the long run.

Crude and Petroleum Products

Crude prices are expected to volatile with an average at US$ 75 - 80 a barrel, up from US$ 60 a barrel in 2009, reflecting the rising global demand as the economy rebounds. This will gradually reduce the inventory overhang that persisted throughout 2009. The following factors will have major influences on the continuing volatility of crude prices: Petroleum Product Demand: The International Energy Agency forecasts global demand for finished products to reach 86.3 million barrels per day, increase from the previous year by 1.44 million barrels per day. Major contributors to this growth are developing countries such as China, India, and the Middle East. The US and Europe will post only a slight demand recovery in 2010, taking a few more years before reaching pre-recession levels. Crude Supply and OPEC: Spare crude production capacity will remain in 2010 but will gradually drop as world demand returns. OPEC will continuously monitor price movements, ready to step in and raise the production ceiling to maintain prices at levels that do not negatively impact on oil consumption as in 2008. OPEC is expected to keep production unchanged at 24.84 million barrels per day until mid-2011 when crude inventories are expected to return to normal levels. Crude and Product Inventories: Oil inventories around the world had been building up since late 2008. In particular, the inventory level of diesel, kept in conventional storage and offshore tankers, was record high. Inventories will

gradually fall to noticeable levels in the second half of 2010. As the economy picks up and oil demand rebounds, crude and product inventories should return to normal levels by mid-year. Regional Refining Capacity: This year will see the regional refining capacity grow 1 million barrels per day in addition to the increase of 1.6 million barrels per day in 2008. Driven mainly by China and India, this growth will force regional, European and US refineries which are costly to operate, less efficient and small-scale to gradually lower their utilization rates while operations that are losing profit may have to shut down permanently. In the US alone, the number of unprofitable refineries being closed since late last year is on the rise. It is expected that refinery utilization rates will grow this year as oil demand recovers, however the supply surplus of petroleum products will ease as capacity cuts are imposed by low-margin refineries. Fund Investors and Oil Speculation: The massive amounts of capital injected by global governments have flooded markets with excess liquidity. While the real sector is still too fragile to invest in, hedge funds are increasingly turning to speculation in energy commodities to hedge against dollar weakness and inflation. Moreover, investors are sensitive to economic recovery news and their sentiment influences their decisions to move more funds into the money, stock and oil markets. This speculative investment will continue to be a major contributor to crude price volatility in 2010 irrespective of any restriction to be imposed by US regulators on excessive speculation. Geopolitics in Oil-Producing Nations: Tensions between Iran and the West over the former’s nuclear program and unrest crisis in Nigeria are likely to continue into 2010 but with no major impact on crude prices. Given the oversupply of crude in the market, unstable political situations are expected to drive up prices for only a short term. Seasonal Weather: Demand is typically high for gasoline during the US summer driving season (late May to August) and for diesel fuels and heating oil in the winter months (December to March). These seasonal consumption patterns drive up gasoline and diesel prices worldwide. There is also the potential risk of the hurricane season in the Atlantic (July to November) affecting prices of crude oil and petroleum products as crude and natural gas production facilities in the Gulf of Mexico could be disrupted or damaged temporarily as had happened in 2005 in the aftermath of hurricane Katrina.

Domestic Oil Market

The Thai economy is trending upward, supported by the improving world economy. The Fiscal Policy Office under the Ministry of Finance forecasts that the domestic economy will expand 3 - 4% in 2010. This expansion will push domestic consumption of petroleum products up by 2%. Aviation fuel demand is expected to adjust upward after contracting as much as 5% in 2009, while cooking gas consumption should continue to grow under the government’s subsidy program. However, the following factors have been identified to put Thailand’s growth at risk including the stimulus effort of the government is not working as planned; the Bank of Thailand raising interest rates sooner than predicted; the unsettled


038

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT INDUSTRY OVERVIEW

domestic political situation; and the fallout from the environmental impact review of projects in the Map Ta Phut industrial estates that could influence investment decisions of the private sectors as well as affect Thailand’s tourism industry. The volume of refined products is also set to adjust upward through capacity expansion programs undertaken by local refineries in 2009. Competition in the domestic market, therefore, will intensify this year, spurred further by the government’s policy to push for more renewable energy, especially ethanol and biodiesel.

parts and tires, as well as improving production for export. Meanwhile, production of electronics, computer parts and telecommunication equipment are also gradually returning to normal levels. This will boost the demand for solvents used in manufacturing processes and industrial cleaning solvents used in many industries.

Aromatics Market

The recovery of the global economy is expected to return a growth of 3-5% to the demand for aromatics in 2010. Aromatics are used as raw materials in the manufacture of a wide range of everyday consumer products--textiles, packaging materials, electrical appliances, electronic devices--and automotive parts as well as applications in the construction industry. This year, the manufacture of these downstream products should be positively affected by global economic growth and stimulus measures. Aromatics output is forecast to increase in 2010 after new Aromatics plants facilities came on stream in 2009 in China and the Middle East. In addition, there are 5 Olefins plants in the Asia Region that are able to produce aromatics as by-products. These plants will begin to operate in 2010. The output growth will exert downward pressure on aromatics prices and capacity utilization in the region. On the other hand, prices could rise if the start-up of the new facilities is delayed. Then, there is the risk of aromatics production being cut back mid-year as the supply of starting feedstock becomes tight. This is due to refineries operating at reduced capacities combined with naphtha-based olefin plants decreasing their production because they cannot compete with Middle Eastern plants which use natural gas as feedstock. This may result in the decrease of the aromatics productions, which may result in the increment of aromatic prices.

Lube Base Oil Market

In 2010, the recovery from the economic downturn will boost regional demand for lube base oil by 5% while

domestic consumption is expected to rise by 4%. This demand growth is predominantly for Group II and Group III base oil but Group I grade produced by Thaioil still commands 70% of the regional market share. On the supply side, a few Group I plants in Europe and the US will gradually be closed due to the majority of the demand coming from the Asia Pacific Region. Closure of these plants with high operating costs could lead to rising prices for lube base oil, especially the heavy-duty lube base oil.

Solvent Market

The trend in 2010 for the solvent market is encouraging after the collapse in demand during the worldwide recession in late 2008. The demand for solvents used in a variety of industries are on the rise once again on the back of the recovering automotive and related industries as seen in the increased domestic production of automobiles, spare

039

Tanker Market

The tanker market is on the rise in 2010 as a result of sales growth in the region for both petroleum products and petrochemicals, which is led by the demand for 5,000-10,000 dwt petrochemicals tankers. It is anticipated that volumes of imported and exported petrochemicals in Asia, particularly from China, South Korea, Japan, Thailand and Taiwan, will adjust upward. In addition, the increased volume of palm oil exported from Malaysia and Indonesia to Thailand, India and Bangladesh, were consistent with increased renewable energy that is considered as another factor in supporting regional tanker demand. Lastly, the international maritime regulation requiring double hulls in tankers is another aspect supporting the market in 2010.

Ethanol Market

The tight supply of ethanol is anticipated to improve in 2010 as a result of higher sugarcane cultivation and increased production of sugar molasses, which are used as feedstock for ethanol production. New production capacity from cassava-based ethanol plants will further help ease the shortage of molasses. Additionally, ethanol price volatility is expected to lessen as cassava-based ethanol plants come on stream and output is raised. There will be 19 ethanol plants in 2010, an additional two from 2009, with a total production capacity of 2.875 million liters per day. (The capacity ratio of using sugar, cassava and molasses as feedstock is 62, 31 and 7 respectively.) Ethanol supply in 2010 is expected to balance domestic demand while consumption will increase to 2 million liters per day.

Electric Power Market

Electric power demand will grow 4%, primarily from the industrial and business sectors, in alignment with the recovering economy of Thailand and the government’s policy to freeze the fuel tariff (FT) until August of 2010. The capacity for electric generation in 2010 is expected to increase 1,620 megawatts with 920 megawatts from the Nam Theun 2 Hydroelectric Project in Laos and 700 megawatts from the North Bangkok Power Plant.


040

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FUTURE PROJECTS

041

Future Projects The Thaioil Group strategic investment plan aims to enhance the company potential in conducting business toward sustainable growth and to strengthen its reliability in order to face with the future volatility of oil and petrochemical industry. This objective is achieved by focusing on expanding refinery operations that are linked to the petrochemical and related businesses, adding value to products, and continuing to invest in power and alternative energy. These efforts underlie the Company’s vision to be a leading energy company in the Asia Pacific.

Projects Underway

• EURO IV Fuel Thaioil commenced the project to produce EURO IV fuel in 2007 in order to comply with the government’s regulation that will become effective in 2012. By February 2008, four years prior to the deadline, Thaioil was able to launch the new standard diesel fuel to market. Though the principal goal was to support the government’s policy on environmental improvement, the Company also managed to expand its domestic market shares of diesel fuel. In June and September this year, Thaioil further introduced gasoline 95 octane and gasoline 91 octane on EURO IV standard. The Company also sets to build a unit to reduce sulphur in catalytic cracked gasoline

in order to produce gasohol conforming to EURO IV standard by the government’s 2012 deadline. For this project, the Company selected Prime G+ technology of Axens and awarded Technip the construction contract. The 1.6 billion baht project has now progressed to the stage of engineering design and procurement of major equipment. When the project is completed in the fourth quarter of 2011, Thaioil will be able to produce diesel fuel and all gasoline grades of EURO IV quality. • TDAE Production by Thai Lube Base Thai Lube Base is undertaking the project to build a unit to process distillate aromatic extracts into Treated Distillate Aromatic Extracts (TDAE). Containing less than 3% of polycyclic aromatic hydrocarbons, non-toxic TDAE are used in the manufacturing of high-quality car tires, which is mandatory in the European Community in 2010. Engineering design has completed and the project has now progressed to the stage of procurement and construction. With the investment cost of US$ 25 million, Thai Lube Base will have the capacity to process additional 67,000 tons per year of TDAE. Completion and commercial operation are scheduled for early 2011. • Marine Fleet Expansion by Thaioil Marine According to the two-phase fleet expansion plan of Thaioil Marine, new petroleum and petrochemical tankers will be acquired to address the ever-growing demand of PTT Group. Two petrochemical tankers of 7,000 deadweight tons (dwt) each, and one medium range clean product tanker of 30,000 dwt have been delivered

under phase 1, with the acquisition of another petrochemical tanker under review. In phase 2, four tankers are planned for delivery during 2010-2012. Three will be petrochemical tankers with two at 7,000 dwt each and one at 3,000 dwt. The fourth will be a 40,000 dwt clean product tanker.

Thaioil Marine plans to acquire two tankers with the capacity of 7,000 dwt each in 2012 to replace the existing aging petrochemical tankers. The aforemented marine fleet expansion will enable Thaioil Marine to serve 25% of PTT group demand. • TOP Solvent (TOP Solvent Company Limited) Thaioil has expanded into the solvent business in Thailand covering production, distribution and marketing. After acquiring the business from Shell Company of Thailand, the Company formed TOP Solvent Company Limited in December 2008 to run the operation. A business plan is already in place to synergize with Thaioil Group and reduce operating costs in the area of feedstock procurement and utilization of by-products within Thaioil Group. The business has also been expanded to solvent distribution in Vietnam. A terminal, with delivery and distribution facilities, is located in Go Dau near the industrial complex at Ho Chi Minh. This is the Company’s first overseas operation, which targeted to capture the opportunity of Vietnam’s great growth potential, and from which Thaioil can expand into other markets by leveraging its wide-ranging expertise.

Projects under Study

• Aromatics Output Optimization by Thai Paraxylene Thai Paraxylene plans to revamp Tatoray Unit into the STDP (Selective Toluene Disproportion) unit. The process will convert the low value toluene into the higher-value paraxylene, for which there is growing demand, and benzene. The estimated capital cost of the project is US$ 45 million, less investment than constructing a new process unit. • Hydrocracker Unit 2 Expansion Thaioil plans to expand Hydrocracker Unit 2 in order to reduce the production of low-value fuel oil and increase the production of higher-value diesel fuel and naphtha. A feasibility study is being undertaken of the project that is estimated to cost US$ 200 million. • Port and Terminal Synergy by Thaioil Group and PTT Sriracha Thaioil plans to implement a synergy program between Thaioil Group and PTT terminal at Sriracha to jointly improve port and product storage tank management. The proximity of the sites and similarity of the products offer the opportunities to trade petroleum products and petrochemicals. The synergy will enhance the effectiveness and flexibility in managing the facilities as well as gain savings in operating costs and future investments.


042

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT REFINING AND PETROCHEMICAL OPERATIONS

043

Refining and Petrochemical Operations • Alternative Energy To address the government’s alternative energy policy, Thaioil has studied the viability of investing in a number of alternative energy sources, such as biomass, solar and wind power plants. At this initial stage, the Company is investing in alternative energy via MFC Energy Fund. This approach allows Thaioil to access the extensive data on various alternative energy sources for use in future investments. It is a low-risk entry into alternative energy investment for Thaioil and benefits the domestic small-sized operators, who have high potential. • Mergers and Acquisitions (M&A) Thaioil has been seeking new investment opportunities consistently, both locally and abroad, in its drive toward long-term growth. The period of economic downturn, especially, offered good under-valued M&A targets. The Company’s diversification into overseas business started with the acquisition of the solvent business in Vietnam from Shell Vietnam Limited. The M&A allows Thaioil to quickly achieve its growth target. It also enables the Company to choose strategically aligned acquisitions to enhance Thaioil’s value or to diversify its risks to targeted businesses, such as ethanol production, power generation, and other industries related to Thaioil’s core business.

Following the difficult economic environment of 2008, Thaioil and subsidiary companies could continue to operate at optimum capacity utilization. This success was achieved through the integrated production planning which facilitated optimization of the operations of Thaioil, Thai Lube Base and Thai Paraxylene, subsidiaries in which Thaioil holds 100% stake each. In 2009, Thaioil refinery processed 273,563 barrels per day of crude and feedstock, utilizing 99.5% of its processing capacity. Thai Lube Base achieved a throughput of 246,650 tons per annum, equivalent to a capacity utilization of 93.1%, which was consistent with the depressed lube base oil demand during the first quarter while Thai Paraxylene ran a throughput of 762,282 tons per annum, which corresponded to a utilization rate of 84.4%.

Refining Operations

In 2009, Thaioil processed crude oil and other raw material at the rate of 273,563 barrels per day on average equivalent to a capacity utilization of 99.5%. To accomplish this feat during a period of economic turbulence that began in 2008 is due to the process flexibility that enables Thaioil to produce a variety of products according to customer requirements, as shown in Figure 1. In June 2009, Thaioil became the first refinery in Thailand to produce gasoline compliant with EURO IV standard. The Company also broadened its product distribution channels to overseas. This demonstrates the capability of Thaioil in maintaining its leadership position as an oil refining company of international standard in Asia Pacific. To maintain the readiness and competitiveness of the process capability at all times, Thaioil performed regular inspections, maintenance and modifications of equipment as well as processing operations to optimize performance, namely: • Improved the efficiency and capacity of the power generating unit by injecting fogging into the air received by the combustion chamber to reduce the combustion air temperature. • Used unconventional crude, which provided better margin, as feedstock for process units. • Increased the proportion of jet fuel and diesel fuel from fuel oil by increasing the temperature in the vacuum distillation unit. • Modified the jet fuel loading system via the conventional buoy mooring, a project which helped improve the efficiency in product sales to overseas customers as it provided greater convenience and speed. • Increased the production of diesel fuel by introducing the surplus from Sak Chaisidhi, in which Thaioil holds 80.52% of shares via TOP Solvent, for additional blending. • Developed the online optimization system for process units, which is an advanced process control that enables higher production of valuable products.


044

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT REFINING AND PETROCHEMICAL OPERATIONS

• Cooperated with the development of advanced process control for Thai Lube Base process units (VDU, PDU, MPU and SDU) to increase the volume of higher-value products and reduce energy consumption. • Cooperated with Thai Lube Base by providing a higher proportion of CDU-2 residue to the subsidiary for use as feedstock in order to increase the production of lube base oils, an effort which developed from integrated production planning by Thaioil and subsidiary companies.

Operational Performance Review

Crude and Feedstock Refining Process

ADIP

FUEL GAS

ISOM HDT-1 HDT-2 HDT-3

CCR-1 CCR-2

Crude CDU-1 CDU-2 CDU-3

PREMIUM

Thaioil Operation Performance Review 2008/2007 Operating Cost excl. Fuel & Depre., US$/bbl Operational Availability, %

Q4 Q3 Q2 Q1

Loss Index

Annualized Maintenance Cost, US$/EDC

Maintenance Effort

REGULAR KMT

JET KEROSENE FCCU

Long Residue

The 2008 operational performance review by Shell Global Solutions International benchmarks Thaioil’s operations against over 40 leading world oil refineries, all under technical service agreements with Shell. The overall operational performance of Thaioil, measured against KPIs, achieved a satisfactory rating, as shown in Figure 2. According to findings of the review, Thaioil’s performance in the areas of operating cost excluding fuel and depreciation, annualized maintenance cost, labor cost, energy index, and operational availability were good compared to 2007. This is credited to regular inspection and maintenance according to plan. Also, the reduced maintenance labor drove the Thaioil personnel index lower.

LPG

PLATFORM

045

HVU-1 HVU-2 HVU-3

HDS-1 HDS-2 HDS-3

HMU-1 HMU-2

TCU

HCU-1 HCU-2

AGO DIESEL

Figure 1: Thaioil refinery flow diagram.

SRU-1/2 SRU-3/4

Shell Personnel Index

Figure 2

FUEL OIL ADIP

Labour Cost, Mil. US$/NSP

Energy Index

SULPHUR

2008 2007

Quartiles represent participating refineries by ordered distribution according to their performances divided into four equal groups. The first quartile (Q1) represents the top 25% of participating refineries (good performance). The second quartile (Q2) represents the 2nd 25% of participating refineries (satisfactory performance). The third quartile (Q3) represents the 3rd 25% of participating refineries (fair performance). The bottom quartile (Q4) represents the bottom 25% of participating refineries (poor performance).


046

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT HUMAN RESOURCE AND ORGANIZATION STRUCTURE DEVELOPMENT

047

Human Resource and Organization Structure Development Human Resource Development

In 2009, Thaioil remained stable in all fronts amid the challenges of the economic recession and consolidated its position as a leading organization. This is evident from the performance delivered and the strategic projects implemented, which reflect Thaioil’s determination to achieve excellence in responding to stakeholders’ needs. The main driving force behind every success was the employees in whom Thaioil had implemented an aggressive competency-based human resource management program that was linked to the Company’s strategic goals. This made the development of organizational management flexible and led Thaioil to become a high-performance organization, while employee engagement to the Company can be maintained at a satisfactory level. Finally, the project can ensure the achievement of the Company’s goal as being “the workplace of choice” for talented personnel. Thaioil has integrated Strategic Focused Organization (SFO) concept, Total Quality Management (TQM), brand management and corporate values (POSITIVE) altogether. These are elements which develop and promote the staff’s ethics, professionalism and align their behavior to strategic goals.

Performance Management System

The Performance Management System (PMS) that was successfully implemented with middle and higher management was adapted into the Performance Appraisal System (PAS) for application to all Thaioil Group employees. The premise of the system is that the qualities assessed will determine the desirable behavior of the employees. The tools used for this purpose are the Balanced Scorecard (BSC) and KPIs, which translate strategies into individual action plans, and the 360-Degree Competency Assessment, which transformed the POSITIVE value into the competencies that can be assessed. In addition, Thaioil organizes an Operational Excellence Workshop every quarter. The workshop provides the specific channels for the CEO and senior executives to communicate Company’s policies and directions to the middle management and related employees. This enables employees to integrate business strategies into their initiatives and performance, hence ensure accomplishment of satisfactory results.

Individual Career Plan and Individual Development Plan

Under Thaioil’s employee participative management policy, staff have roles to take parts in setting up their individual career plan and individual development plans. Job rotation is one of the methodologies for employees to acquire new knowledge and skills through on-the-job training and coaching by experienced staff. This will serve the organization

by having employees who have knowledge, skills and strengths to contribute to business needs over the long run

as well as to provide qualified manpower for succession plans.

Employee Development for Top Management Succession

Thaioil is cooperating with PTT Plc. to develop senior management in preparation for running the business both in present and future. Thaioil has appointed a consultant to study and design models for top management positions.

The models comprise of success profiles that are linked to business drivers as the framework in assessing

the competencies, experiences and attributes of the employees for development in preparation for future succession.

The development of senior management’s capabilities is based on the strengths of each person through the application of mentoring methodology, executive personal coaching, etc. With more than 48 years of experience, Thaioil has a large pool of refining business knowledges and skills. The Company also recognizes the importance of this knowledge and hence adopts knowledge management tools to develop the next generation of employees. Critical knowledge, skills and experiences in each specific area are being identified and stored. That knowledge is then shared with employees at training workshops, which is recorded for analysis and can be further accessed by related employees.

Organizational Structure Development

Thaioil’s organization was formerly structured by functional lines, which worked well for the business at that time. With rapidly changing in business environment and in order to provide support for the new strategic goals and organizational culture, a consultant was employed in early 2007 to review, recommend and design a macro-structure organization based on the existing competencies. The main feature of the macro-structure organization is adjusting the upper structure of the organization according to business targets and work processes. The focus of the new organization is on external and internal customer service, prompt and effective response to business requirements, further changes, and teamwork. The approach in restructuring the organization began by fully understanding Thaioil’s desired business strategy and working culture. This was followed by the study of core working processes, which includes various support systems. The consultant worked closely with Thaioil’s management to apply the international oil industry best practice. The result is an organizational structure that can best meet business needs and is ideal for the Company. The trial of new design concept was conducted on a number of employees to ensure that the process works well and can adapt as needed. The design was also tested with top executives, which was a crucial step of the project. Upon completion of the project, a workshop was held for senior management to decide on the implementation of the new organizational structure. The macrostructure organization was designed to focus on the three following components: Focus on shareholders’ interest Manage “current business” Develop growth and enhance confidence in including organic growth with future business effective business management Structuring management this way enables the CEO to focus on leadership and management in terms of new strategies which are necessary for business growth, while the COO (Chief Operating Officer) focuses on efficient performance, development and integrating existing business units.


048

Thaioil is confident that the newly designed organization structure would provide the following key benefits: • To promote the business growth through the establishment of organization structure that supports the vision and strategic plan of Thaioil Group. The designed structure will align all work processes and ensure that the organization target is achieved. • To enable the establishment of synergy benefit and promote the cooperation among Thaioil Group to create value added. • To expand the concept of Area Production Unit (APU) which has been successfully deployed in certain areas to cover the overall work processes by combining the operation of fuel refinery, lube base oil plant and aromatic plants altogether. • To enhance the customer satisfaction by integrating roles and functions of commercial and manufacturing units. • To be flexible and sustainable organization by being able to adapt and response to changes.

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT HUMAN RESOURCE AND ORGANIZATION STRUCTURE DEVELOPMENT

049


THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE SOCIAL RESPONSIBILITY AND QUALITY, HEALTH, SAFETY AND ENVIRONMENTAL MANAGEMENT SYSTEMS

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Corporate Social Responsibility and Quality, Health, Safety and Environmental Management Systems Moving Together Toward the 49th Year

Throughout Thaioil’s 48-year experience, one important thing Thaioil has never neglected is the responsibility to all stakeholders. Since the refinery first came on stream until today with all its related businesses, Thaioil has not only been committed to the environment, an area very much at concern these days, but to all of its stakeholders as well. Thaioil has taken into consideration the impact on its neighboring communities and employees from the quality of life, economic or social aspects in recognition that “business cannot succeed in a society that fails”. It has, therefore, been Thaioil’s practice for over 48 years to co-exist in harmony, supporting each other and growing together. In 2009, Thaioil continued to prioritize its corporate social responsibility in every area. A large number of societybased projects were implemented, particularly developing the quality of communities and the environment both around the refinery and in remote areas where government services fail to reach. These efforts went in parallel with the development of work standards and effective management of all systems.

1. Environmental and Safety Performance

1.1 Environmental Performance Thaioil is committed to managing natural resources sustainably, systematically, comprehensively and in

a manner that maximizes its value. This includes preventing, monitoring and solving environmental problems and climate change at the root cause. The extent of responsibility is not restricted to only the area nearby the refinery but encompasses areas at local and national levels by ensuring that Thaioil’s products and operations are truly friendly to the environment. • Environmental Quality Management Throughout 2009, the results of environmental quality assessment around the refinery were always satisfactorily below the standard limit. This was due to the full and strict adherence to the law while the impact on the health of the local community was closely monitored. Air and water quality measuring stations were set up for continuous assessment and views of stakeholders and academics were taken into consideration. • Selection of Appropriate Technologies for Process and Auxiliary Units For instance, the construction of 4 Sulphur Recovery Units to recover sulphur, as a by-product, from sulphur dioxide. The installation of Vapor Recovery Unit to capture oil vapor from venting into the air during product distribution, contributing towards pollution control and reduction of oil loss. • Construction of Effluent Treatment Plant with Denitrification - Nitrification Biotreater to treat waste water before discharging outside the refinery. • Environmentally-friendly products In addition to EURO IV-grade diesel fuel, Thaioil commenced production of gasoline 95 and 91 octane to EURO IV standard, which have sulphur content 10 times lower than conventional gasoline. Thaioil was the first and only refinery to produce and distribute these products in Thailand.


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE SOCIAL RESPONSIBILITY AND QUALITY, HEALTH, SAFETY AND ENVIRONMENTAL MANAGEMENT SYSTEMS

• Production of Treated Distillate Aromatic Extracts (TDAE) according to the standard for low-toxic extender oils imposed by the European Community, which is abided and certified by leading tire manufacturers, that it can reduce the amount of carcinogenic particles released during use of tires from tire wear. • Energy-saving project whereby the heat from gas turbine exhaust is utilized to produce steam. • Designated green areas covering 30% of the refinery complex, in which trees were planted to form a natural fence between the surrounding community and the refinery. Thaioil will continue to fulfill our corporate social responsibility in the future with more community-andenvironment-based projects that aim to conserve energy and sustain natural resources. Thaioil is, for example, undertaking a feasibility study of a zero-discharge project to treat waste water by a reverse osmosis process and recycle it for re-use.

1.2 Safety Performance The importance of stakeholders has shaped the priority Thaioil places in the management of employee occupational health and safety. To raise the quality of work and quality of life of employees and all concerned parties, Thaioil has applied a number of management systems and international standards, including TIS 18001 and OHSAS 18001 for occupational health and safety, which will contribute to a strong corporate performance. • Potential Incident Report Thaioil has launched the campaign for employees and contractors to write the Potential Incident Report (PIR), which covers events that have occurred and not yet caused injury or damaged property but have the potential to cause so. The number of potential incident reports was set as a leading indicator, to be used as proactive data for the efficient and effective prevention of accidents. Several additional action plans were established to prevent repetitive accidents, such as Enhanced Safety Management (ESM). The support of Thaioil management for the safety management system to minimize accidents was reflected in the decision to implement several measures, e.g. establish safety as a responsible duty of all staff according to the line of supervision, organize activities to promote safety such as toolbox talk meetings, invite the management of contractors to co-audit work safety, and implement the “Friend Helping Friend with Safety Recommendations” Project. • Competency Development Thaioil has established the safety competency development plan for all levels of staff in the form of Individual Development Plans (IDP), training modules, knowledge management, Process Improvement for Operational Excellence (PIOE), etc. This is to ensure that employees are knowledgeable, competent and skillful, appropriately and adequately for jobs, positions and assignment to enable them to perform their tasks safely.

053

• Shared Safety Service Thaioil modified the organizational structure in order to enhance the potential of safety management of Thai Paraxylene, Thai Lube Base, and Independent Power (Thailand), companies of Thaioil Group and operating within the proximity of refinery. Supports are shared among the companies and provided through personnel rotation, pooling of safety and firefighting equipment and tools, centralizing personnel to repair and maintain safety equipment, performing safety training, setting up emergency plans and expanding the central firefighting team. These efforts aim to standardize and strengthen safety by enhancing capabilities, developing personnel and sharing safety knowledge among Thaioil Group companies. • Safety Management and Design Services by Thaioil Energy Solutions With Thaioil’s lengthy experience and expertise, services are currently offered to customers through Thaioil Energy Solutions (TES) on safety management and design of safety and fire prevention and protection

systems. The services include safety and fire assessment, safety training, preincident planning and incident command training, and risk assessment. This initiative also enhances the potential of our personnel and develop professional-leveled safety officer in Thaioil Group, by broadening their knowledge, competency and experience, in order to become a crucial force in the future development of safety professionals. • Support to Government and other External Agencies Thaioil was selected to chair the Emergency Response Task Force of the Petroleum Institute of Thailand. The objectives of the task force are to provide support to safety management and emergency response for petroleum and petrochemical industries. Additionally, Thaioil is widely recognized as the technical and technological center for occupational health, safety, and fire protection and prevention management. A large number of public and private agencies, throughout domestic and international educational institutions continuously visit the refinery operations. Every year, Thaioil’s personnel are also regularly invited to be guest speakers and members of drafting committees of laws relating to occupational health, safety, and fire protection and prevention management.


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE SOCIAL RESPONSIBILITY AND QUALITY, HEALTH, SAFETY AND ENVIRONMENTAL MANAGEMENT SYSTEMS

055

• Golden Zero Accident Award By prioritizing on stakeholder interests, according to the principle of corporate social responsibility and integrated management system for quality, occupational health and safety, Thaioil was granted the golden Zero Accident Award from the Ministry of Labor. This was in recognition of the Company record of 10 million man-hours without lost-time accident. Thaioil was the first refinery in Thailand to obtain this award for its determination in performing duties responsibly according to safety management standards, and in continuously improving safety management, as evident by its Total Reportable Case Frequency (TRCf) in 2009 being the lowest in 10 years.

2. Integrated Management System and Management System toward Excellence

This is another effort by Thaioil Group to develop work standards that are consistently reliable and for being the starting point to deliver quality products to customers. In 2009, Thaioil implemented the integrated management system and management system toward excellence as follows:

2.1 Integrated Management System (ISO 9001/ISO 14001/TIS 18001) and BS OHSAS 18001:2007 and Competence of Laboratories Management System (ISO/IEC 17025) • The First Refinery in Thailand to Achieve Integrated Management System Certification The pride of being the country’s leading refinery underpins the importance Thaioil attach to upholding quality, occupational health, safety and environmental responsibilities, which have been embedded into the makeup of employees throughout its 48 years of operation. This is evident from Thaioil being the first refinery in the country to achieve integrated management system certification in 2009 from Management System Certification Institute (Thailand) covering all work activities across the refinery. In 2010, Thaioil will introduce new management systems to further support its operations with continuous and sustainable improvement so as to become Strategic Focused Organization. • Laboratory Management System (ISO/IEC 17025) The Laboratory Management System (ISO/IEC 17025) has been continuously improved. The newly developed project relating to laboratory that had been implemented during 2008-2009 was the Thaioil Group Laboratory Control System, of which the benefits are: • Enhancing the efficiency in controlling the testing equipment to ensure accurate test results. • Establishing a system that improves convenience and speed, reducing repetitive documentation

and records.

2.2 Management System toward Excellence Thaioil is committed to continuously improve the competencies of its management system in order to achieve the targets of being an organization of excellence and a leader of a fully integrated oil refining and petrochemical business in Asia Pacific, able to meet the needs and expectations of all stakeholders. Thaioil has, therefore, adopted the criteria of Thailand Quality Award for using as a tool to support the appraisal and development of organization management. Thaioil submitted an application report detailing the processes and results of its performance for the Thailand Quality Award with the following objectives: 1. To appraise the performance of management system based on international standard criteria, which

will provide opportunity to further improve and develop its competitiveness. 2. To share experiences with other organizations and hence support the country’s competitiveness.


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE SOCIAL RESPONSIBILITY AND QUALITY, HEALTH, SAFETY AND ENVIRONMENTAL MANAGEMENT SYSTEMS

3. Social and Community Activities

The community around the refinery is another segment that is hugely vital to Thaioil as the Company recognizes and believes in the concept of growing together. Thaioil had implemented a continuous string of various activities, especially in developing the quality of life of the community, such as education and public health, including the activities to preserve the local customs and traditions. There are long-term projects, such as in the area of education, and new projects jointly developed by the community and Thaioil, which reflect the long-standing cooperation, good will and relationship between Thaioil and the local community.

• Educational Support and Quality of Life Development for Youth Projects

With the belief that education is the foundation of development, in 2009, Thaioil had expanded its scholarships for students at primary school to university level from 126 to 162 scholarships covering 22 communities in Laem Chabang Municipality. This provided education opportunity to poor youths with good study results. Thaioil also initiated the Knowledge plus Ethics Create Youth Leader Project to serve the needs of the community. The project offers educational support to youths in seven communities surrounding the refinery with good study results, well behaved and contributions to the community and society to further their education at bachelor degree level at Kasetsart Univeristy, Sriracha Campus. By providing education at a local university, it is believed that the graduates will become future active contributors to the development of the community. Thaioil’s scholarships provide educational support until the graduation. 1. Educational Funds • Princess Maha Chakri Sirindhorn Fund under the royal patronage awards scholarships to unlimited levels and education fields either in Thailand or abroad. The fund aims that graduates use their knowledge and experience to fulfill the royal intent and contribute to the betterment of the country. • Thai Oil Public Company Limited Fund under the Ananda Mahidol Foundation.

057

2. Collaboration with Educational Institutions Thaioil have been collaborating with various educational institutions to organize activities and projects related to the promotion and development of youth education. Participants will have chance to gain scientific experience from activities which encourage learning that helps develop logical thinking, which will lead to understanding and create the skills necessary to learn so that they become a major force in the future development of the community. These programs are: - Chemical Engineering Practice School Program (ChEPS) for King Mongkut University Technology Thonburi students. - Thaioil Education Fund to Commemorate Dr. Pramoj Chaivej in collaboration with Engineering Institute of Thailand Foundation.

- Construction of basic infrastructure for the locals in remote areas via the support to the Borpit Young Engineer Camp. - Culture and Science Youth Camp Project in collaboration with the National Science Museum. - Brushstrokes of Dreams Project under the theme of “Persuade a Friend to Tell a Story: Keeping the Thai Language Alive”. - Thaioil Youth Diplomats Project which encourages youths to love their hometown and acts as a medium in communicating and raising awareness of various undertakings by the community and Thaioil. • New Dimension in Cooperation: From Shelf to Store These are projects on which Thaioil cooperated with the Petroleum and Petrochemical College of Chulalongkorn University to merge together the R&D potential of the education sector and the capacity of the industrial sector in operating business. The cooperation aims to transform the research results to energy innovation and further develop to generate business value added. The program focuses on efficient use of energy and development of products and alternative energy for the future. Three R&D projects were undertaken this year with the potential of extending the results into practice.


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE SOCIAL RESPONSIBILITY AND QUALITY, HEALTH, SAFETY AND ENVIRONMENTAL MANAGEMENT SYSTEMS

059

(1) Energy Conservation for Crude Distillation Unit (CDU): Application of the Pinch technology in arranging and designing the CDU-3 heat exchanger for optimized efficiency. (2) Evaluation of Commercial HDS Catalyst Performance: Building a small-scale pilot reactor to test the hydrodesulfurization process catalyst in order to produce EURO IV and EURO V grades of diesel fuel. The objective is for the lab to meet international standards and gain acceptance by catalyst producing companies. (3) Waste Tires to Fuels: The research is regarding the process to convert used tires into liquid fuels for development into commercial production. The research covers the method and process for efficient collecting of used tires, designing a prototype plant to produce fuel from used tires, and conducting economic analysis to determine commercial viability of the prototype plant. • Community Health and Quality of Life Following the success of Thaioil mobile medical service project which attracted wide participation from the public, Thaioil extended public service offering, according to the needs of the community, to enhance knowledge and skill. The Company initiated the project to construct the Thaioil Group Health and Learning Center for the Local Community that provides basic health services for the community and enhances knowledge and skill. The center offers a library, occupational training, a courtyard for staging health activities, and promotion of young children development. The aim is to empower the community in a realistic and sustainable manner. • Environmental Conservation Thaioil Group collaborated with Kasetsart University, Sriracha Campus, Laem Chabang Municipality, and the committee of the community surrounding the refinery in initiating the community biodiesel production from used vegetable oil project to reduce pollution. Used oil from shops and homes were collected and processed into biodiesel to help lessen water and air pollution as well as health problems from food prepared with used vegetable oil. The project also acted as a knowledge center on alternative energy for students and the interested public. Thaioil Group provided financial support to Kasetsart University to research and build the machine to produce biodiesel. • Stove Modification for Tea Plant Steaming, Muang Pan District, Chiang Mai Thaioil Group, the Energy Policy and Planning Office, Chiangmai University, and the Energy for Environment Foundation collaborated to develop the energy-efficient stove for steaming leaves of the tea plant. Locals of Baan Pa Miang have been steaming and selling tea leaves for generations. The leaves are consumed in their households or sold as a local product of the North. Steaming in the conventional way takes about 90 minutes for 25 kilograms of tea leaves, burning 20-25 kilograms of wood. An energy-efficient stove is able to steam the same volume of tea leaves in 60 minutes, burning only 10 kilograms of wood. Energy consumption is saved by as much as 60%, which equates to reduced deforestation or more than 4,800 tons of trees saved from being cut down. There are currently 83 energy-efficient stoves being used in 83 households, reducing greenhouse gas by 34,800 tons of carbon dioxide per year. Thaioil plans to expand this project to other villages in the near future.

Thaioil Group Health and Learning Center

• Village-Level Hydropower Plant at Baan Pian Sub-District, Doi Saket District, Chiangmai Thaioil lent support through the Energy for Environment Foundation in cooperation with the Alternative Energy Development and Energy Conservation Department in developing the project to build a small hydropower plant of 3 kilowatts, the capacity needed by the community. The project, which is now in operation, included the installation of a turbine generator, control and transmission systems, and transmission poles. The location is at Baan Pian, a village too remote for the Electricity Generating Authority of Thailand to reach. The villagers previously used electric power generated from solar cells of 120 watts. But the area did not facilitate full power generation because of regular rains disallowing villagers to use electricity comsistently throughout the year. • Hydropower Plant at Huay Poo Ling Sub-District, Baan Luang District, Chiangmai This project was implemented through the cooperation of various agencies and Thaioil Group in order to provide support to fulfill the normal lives of villagers. The project expanded the power transmission lines to transmit power to two villages of 66 households, thereby enhancing the quality of life and providing the opportunity for them to access news and information. Thaioil is committed to continue our involvement in social-based projects and the improvement of work standards. The activities will focus on environmental conservation, equitable treatment to all stakeholders, and beneficial to the public. It is Thaioil’s hope that these efforts represent its commitment to conduct business while embracing corporate social responsibility, according to good corporate governance principles, as the Company embarks on its 49th year alongside the Thai public.


060

061

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT BOARD OF DIRECTORS

Board of Directors as of December 31, 2009

Mr. Somnuk Kyavatanakij

Mr. Nontigorn Kanchanachitra

Miss Puongpech Sarakun

Mr. Prasert Bunsumpun

Age 48 Yrs.

Age 54 Yrs.

Age 63 Yrs.

Age 58 Yrs.

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND CHAIRMAN OF THE BOARD

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND CHAIRMAN OF THE NOMINATION AND REMUNERATION COMMITTEE

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND MEMBER OF THE NOMINATION AND REMUNERATION COMMITTEE

Education

Education

Education

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD) - None Other Training

• B.Sc. in Industrial Engineering, Chulalongkorn University • M.Sc. in Operation Research, Florida Institute of Technology, USA • Certificate in Director Accreditation Program (DAP 2003) • Certificate in Director Certification Program (DCP 59/2005) • Certificate in Role of Chairman Program (RCP 19/2008)

Other Training

• B.A. in Political Science, Chiang Mai University • MPA (Public Administration), Middle Tennessee State University, USA • Certificate in Director Certification Program (DCP 102/2008) • Certificate in Audit Committee Program (ACP 22/2008) • Certificate in Financial Statements for Director (FSD 1/2008) • Certificate in Role of the Compensation Committee (RCC 6/2008)

Other Training • Certificate in Democratic Politics and Governance, Class 8,

King Prajadhipok’s Institute • Certificate in Justice Program, Class 11, National Academy of Justice • Certificate in Capital Market Academy Leadership Program, Class 9

• National Defence College, Class 48 • Civil Service Executive Development Program, Visionary and Moral Leadership, Class 41 • Leadership Program, Capital Market Academy, Class 9

2003-2006 Director of Position Classification and Compensation 2002 Director, Aeronautical Radio of Thailand Company Limited Development Bureau, Office of the Civil Service Commission 2002-2003 Director, Provincial Waterworks Authority 2006-2008 Senior Advisor, Office of the Civil Service Commission 2002-2008 Director, East Water Public Company Limited Present Positions 2005-2006 Advisor, Subcommittee in Investments and Risk Listed Company (3) Management, Thailand Tobacco Monopoly • Director, Krungthai Bank Public Company Limited 2008 Director, IRPC Public Company Limited • Director, Asian Property Development Public Company Limited 2009 Chairman, Thaioil Ethanol Company Limited • Director, Interlink Communication Public Company Limited Working Experience in the 5 preceding years

Present Positions Listed Company (1)

• Director, President and CEO, Tong Hua Communications

Public Company Limited

Public Company Limited Company (2)

- None

• Chairman, Internet Venture Company Limited • Director, Thai Paraxylene Company Limited

Other Organizations/Institutions (1)

• Director, The National Press Council of Thailand

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None

Education

• Bachelor of Laws, Thammasat University • National Defence College, Class 43

• Applied Psychology Institute, Class 45 • Civil Service Executive Development Program, Visionary and Moral Leadership, Class 1/4 • Naval War College, Class 27

Working Experience in the 5 preceding years

Working Experience in the 5 preceding years

Public Company Limited Company Other Organizations/Institutions (4)

- None - None

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None

• Deputy Secretary-General of Office of the Civil Service Commission • Council Committee, Khon Kaen University • Guest Lecturer, Faculty of Law, Chulalongkorn University • Expert Committee in Personnel Management in various departments such as National Economic and Social Development Board, State Enterprise Policy Office.

DIRECTOR (NON-EXECUTIVE) AND MEMBER OF THE NOMINATION AND REMUNERATION COMMITTEE

1999-2007 Director and Audit Committee Member,

Tourism Authority of Thailand 2000-2007 Deputy Secretary-General of the Council of State 2002-2007 Board Member, Financial Institution Development Fund, Bank of Thailand th Member of the 13 and 14th national Labour Committee 2006-2007 Member of the Constituent Assembly and Constitution Drafting Committee 2006-2008 Board Member, Town and Country Planning Board 2009 Legal Advisor, Bureau of the Royal Household

Present Positions Listed Company - None Public Company - None Limited Company - None Other Organizations/Institutions (4)

• B.Sc. in Civil Engineering, Chulalongkorn University • MBA, Utah State University, USA • Honorary Doctoral in Engineering, Chulalongkorn University • Honorary Doctoral in Management, National Institute of Development Administration (NIDA) • Honorary Doctoral in Management, Phetchaburi Rajabhat University • National Defence College, Joint Public-Private Sector, Class 10

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

• Certificate in Director Accreditation Program (DAP), Thai Institute of Directors Association (IOD)

Other Training

• Certificate in Advanced Management Program (AMP 155), Harvard Business School, Harvard University, USA • Certificate in Democratic Politics and Governance, Class 6, King Prajadhipok’s Institute • Certificate in Capital Market Academy Leadership Program, Class 3

Working Experience in the 5 preceding years

2001- 2003 Senior Executive Vice President, Gas Business Group, PTT Public Company Limited 2003-2007 President, PTT Public Company Limited Present Positions Listed Company (5)

• President & CEO, PTT Public Company Limited • Chairman, PTT Exploration and Production Public Company Limited • Vice Chairman, IRPC Public Company Limited • Vice Chairman, PTT Chemical Public Company Limited • Director, PTT Aromatics and Refining Public Company Limited

• Managing Director of the Privy Purse • Councilor, The Council of State • Legal Advisor, Designated Areas for Sustainable Tourism Public Company (1) Administration Board • Qualified member, Rajamangala University of Technology Phra Nakhon • Chairman, Thai Lube Base Public Company Limited Limited Company (2) % of Shareholding - None • Chairman, Independent Power (Thailand) Company Limited Conflict of Interest - None • Chairman, Thaioil Power Company Limited Relation among family with the Company Dispute in the 10 preceding years

- None - None

Other Organizations/Institutions

- None

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None


062

Mr. Manu Leopairote

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND CHAIRMAN OF THE AUDIT COMMITTEE

Age 66 Yrs.

Education

• B.Sc. in Economics (Hons), Thammasat University • M.Sc. in Economics, University of Kentucky, USA • Ph.D. in Business Administration (Honorary), Thammasat University • Diploma for Industrial Development, Nagoya Training Center, Japan • National Defence College, Class 34

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

• Certificate in Role of Chairman Program (RCP 3/2001) • Certificate in Director Certification Program (DCP 30/2003)

Other Training

Working Experience in the 5 preceding years

Present Positions Listed Company (4)

• Chairman, Polyplex (Thailand) Public Company Limited • Chairman, Khon Kaen Sugar Industry Public Company Limited • Chairman, Sherwood Chemicals Public Company Limited • Director, Thai Beverage Public Company Limited Public Company - None • Director, Thaioil Power Company Limited

Other Organizations/Institutions (2)

• Executive Chairman, Neighbouring Countries Economic Development Cooperation Agency (Public Organization) • Member of the Council of State, Group 5 (Trade and Industry Law)

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

Mr. Krairit Nilkuha

Mr. Chaikasem Nitisiri

Mr. Utid Tamwatin

Age 58 Yrs.

Age 61 Yrs.

Age 61 Yrs.

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND MEMBER OF THE AUDIT COMMITTEE

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND MEMBER OF THE AUDIT COMMITTEE

0.0015 - None - None - None

Education

Education

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

• B.Sc. in Mechanics Engineering, Kasetsart University • M.Sc. in Petroleum Engineering, New Mexico Institute of Mining and Technology, USA • Certificate in Audit Committee Continuing and Development Program (ACP 24/2008)

Other Training • Certificate in Capital Market Academy Leadership Program, Class 8, Thailand - None • Diploma, the National Defense Course, Class 48 (2005), National Defense College

2004-2005 Director, PTT Public Company Limited 2005-2007 Director, PTT Exploration and Production

Public Company Limited 2005-2008 Director, Thai Oil Public Company Limited 2005-2009 Independent Director and Chairman of the Audit Committee, PTT Chemical Public Company Limited

Limited Company (1)

063

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT BOARD OF DIRECTORS

Working Experience in the 5 preceding years

2003-2005 Deputy Director-General, Department of Mineral Fuels 2005-2007 Director, PTT Exploration and Production

Public Company Limited 2005-2008 Director-General, Department of Mineral Fuels 2008-2009 Deputy Permanent Secretary, Ministry of Energy

Present Positions Listed Company - None Public Company - None Limited Company - None Other Organizations/Institutions (1)

• Director General Department of Alternative Energy Development and Efficiency, Ministry of Energy

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

0.0006 - None - None - None

• LL.B (Honours), Chulalongkorn University • Thai Barrister at Law • LL.M. Columbia University, USA • Honorary Doctor of Law, Ramkhamhaeng University

• Certificate in Director Certification Program (DCP 8/2001) • Certificate in Role of Chairman Program (RCP 16/2007) • Financial Statements for Director Program (FSD 5/2009) Other Training • Justice Administration Executive Program (Class 1) • Certificate, National Defense College, Class 38 • Executive Civil Service Program 1 (Class 14) • Politics and Governance in Democratic Systems for Executive Course, Class 9 • Capital Market Academy Leadership Program, Capital Market Academy, Class 5 • Cert. in International Procurement, Georgetown University (1981) Working Experience in the 5 preceding years 2000 Director General, Dept. of Intellectual Property

and International Trade Litigation 2001 Director General, Dept. of Litigation of The Attorney General 2002 Director General, Dept. of Legal Counsel, Office of

The Attorney General 2003 Deputy Attorney General, Office of The Attorney General 2007-2009 Attorney General, Office of The Attorney General

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND MEMBER OF AUDIT COMMITTEE

Education

• LL.B. (Honour), Thammasat University • Barrister at Law, The Thai Bar • LL.M., University of California, Berkeley, USA • The Joint State-Private Course, Class of 399, National Defence College • NIDA-Wharton Executive Leadership Program: Wharton School, University of Pennsylvania, USA

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

• Director Certification Program (DCP 3/2000)

Other Training

• The Civil Service Executive Development Program: Office of The Civil Service Commission, Program I, Class of XI • Customs International Executive Management Program: Australian Customs Services (CIEMP) • Mini Master of Management, National Institute of Development Administration (NIDA) • Economic Value Management (EVM): State Enterprise Policy Office and Stern Stewart & Co., Ltd. • The Programme for Senior Executives in Criminal Justice Administration: Judicial Training Institute, Class 11

Working Experience in the 5 preceding years

Deputy Permanent Secretary, Revenue Cluster,

Ministry of Finance 2004 Director-General, The Excise Department, Present Positions Listed Company (2) Ministry of Finance • Independent Director and Chairman of Audit Committee,

2006-2008 Deputy Permanent Secretary, Expenditure and Thai Airways International Public Company Limited Liability Management Cluster, Ministry of Finance • Independent Director and Chairman of C.G. Committee, 2008-1 Oct 2009 Director-General, The Customs Department,

PTT Public Company Limited Ministry of Finance Public Company - None Limited Company - None Other Organizations/Institutions (6)

• Senior Public Prosecutor (Chairman, Advisory Committee To

the Attorney General (C.2)), Office of Attorney General • Director and Executive Board Chairman Government Housing Bank • Member, Office of the Council of State • Member, Yo-Nok University Board • Member, Saint John University Board • Member, Board of Royal Thai Police

% of Shareholding - None Conflict of Interest - None Relation among family with the Company - None Dispute in the 10 preceding years - None

2002

Present Position Listed Company (1)

• Chairman, Eastern Water Resources Development and Management Public Company Limited

Public Company (1)

• Director, Pan Rajdhevee Group Public Company Limited

Limited Company Other Organizations/Institutions

- None - None

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None


064

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT BOARD OF DIRECTORS

General Prayut Chan-O-Cha

Mr. Apisak Tantivorawong

Mr. Banphot Hongthong

Mr. Prajya Phinyawat

Age 56 Yrs.

Age 56 Yrs.

Age 63 Yrs.

Age 58 Yrs.

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND CHAIRMAN OF THE CORPORATE GOVERNANCE COMMITTEE

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND MEMBER OF THE CORPORATE GOVERNANCE COMMITTEE

Education

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND MEMBER OF THE CORPORATE GOVERNANCE COMMITTEE

Education

• Armed Forces Academies Preparatory School (AFAPS) Class 12 • B.Sc. in Chemical Engineering, Chulalongkorn University • Chulachomklao Royal Military Academy (CRMA) Class 23 • MBA Industrial Management, University of Tennessee, USA • Infantry Officer Basic Course Class 51 Training for the Directors courses of Thai Institute of Directors • Infantry Officer Advanced Course Class 38 Association, Thailand (IOD) • Command and General Staff College (CGSC) Class 63 • Certificate in Director Certification Program (DCP 18/2002) • National Defence College (NDC) 5020

2002 Deputy Commanding General, 2nd Infantry Division nd 2003 Commanding General, 2 Infantryst Division 2005 Deputy Commanding General, 1 Army Area 2006-2008 Commanding General, 1st Army Area 2008-2009 Chief of Staff, Royal Thai Army 2009-present Deputy Commander in Chief, Royal Thai Army Decorations

1990 1999 2002 2005 2008

The Rama Medal for Gallantry in Action

of the Honourable Order of Rama The Grand Companion (Third Class, Higher Grande)

of the Most Illustrious Order of Chula Chom Klao Knight Grand Cross (First Class)

of the Most Noble Order of the Crown of Thailand Knight Grand Cross (First Class)

of the Most Exalted Order of the White Elephant Knight Grand Cordon of the Most Noble Order

of the Crown of Thailand

Present Positions Listed Company - None Public Company - None Limited Company - None Other Organizations/Institutions - None

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None

Education

• B.E. in Civil Engineering, Chulalongkorn University • B.A. (Economics), Northeastern University, USA • MS.c. in Civil Engineering, Stanford University, USA • M.A. (Economics Development), Northeastern University, USA • Ph.D. in Civil Engineering, University of Texas at Austin, USA • Diploma, The National Defense Course for the Joint State-Private Training for the Directors courses of Thai Institute of Directors Sector, The National Defense College Association, Thailand (IOD)

- None

Other Training

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

• Certificate in Director Certificate Program (DCP 14/2002)

Working Experience in the 5 preceding years

• Director and President, Krungthai Bank Public Company Limited • Independent Director, Indorama Polymers Public Company Limited Public Company - None Limited Company - None

Present Positions Listed Company - None Public Company (1)

Present Positions Listed Company (4)

• Chairman, Thai Bankers’ Association • Director, Thai Asset Management Corporation (TAMC) • Director, Board of Investment (BOI)

Other Organizations/Institutions (4)

Working Experience in the 5 preceding years:

Working Experience in the 5 preceding years

Education

1999

Other Training

Other Training

Other Training

- None

DIRECTOR (NON-EXECUTIVE) AND MEMBER OF THE CORPORATE GOVERNANCE COMMITTEE

• Certificate in Capital Market Academy Leadership Program, Class 9, Thailand

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

• Certificate in Director Certification Program (DCP 104/2008)

065

• National Defense College, Joint State-Private Sector, Class 16, Thailand

2001-2004 President, Siam City Bank Public Company Limited 2004-Present President, Krungthai Bank Public Company Limited Present Positions: Listed Company (2)

Other Organizations/Institutions (3)

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None

Working Experience in the 5 preceding years

Director-General, Department of Export Promotion, Ministry of Commerce 2003 Permanent Secretary,

Ministry of Agriculture and Cooperatives 2007 Member, National Legislative Assembly 2008-2009 Director, Thaioil Ethanol Company Limited

• Advisor to the Board of Directors and Chief Executive Officer, Standard Chartered Bank (Thai) Public Company Limited Limited Company - None • Advisor, the Thai National Shippers’ Council • Honorable Committee of the Council Member of Rajamongkon University of Technology Isan • Advisor to The Administration of The Land Development Department • Honorary Advisor of the Committee on Agriculture and Cooperatives of the Senate

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None

• Capital Market Academy Leadership Program, Capital Market Academy, Class 7

2002-2003 Senior Executive Vice President, Corporate Strategy

and Development, PTT Public Company Limited 2003-2004 Senior Executive Vice President, Corporate Supports, PTT Public Company Limited 2004-2007 Senior Executive Vice President, Petrochemicals

and Refining Business Group, PTT Public Company Limited 2008-Present Chief Operating Officer, Downstream Petroleum Business Group, PTT Public Company Limited • Chief Operating Officer, Downstream Petroleum Business Group and Senior Executive Vice President, Oil Business Unit, PTT Public Company Limited • Director, Member of Corporate Governance Committee and Chairman of Risk Management Committee, PTT Aromatics and Refining Public Company Limited • Director, Member of the Nomination and Remuneration Committee and Chairman of Corporate Governance Committee, PTT Chemical Public Company Limited • Director, Member of Executive Committee and Member of Corporate Governance Committee, IRPC Public Company Limited Public Company (2) • Director, Thai Lube Base Public Company Limited • Director, Bangkok Polyethylene Public Company Limited Limited Company (9) • Chairman of the Board, PTT Phenol Company Limited • Chairman of the Board, PTT Polyethylene Company Limited • Chairman of the Board, PTT Asahi Chemical Company Limited • Chairman of the Board, PTT Polymer Logistics Company Limited • Chairman of the Board, PTT Polymer Marketing Company Limited • Chairman of the Board, PTT Tank Terminal Company Limited • Chairman of the Board, HMC Polymers Company Limited • Director, Rayong Olefins Company Limited • Director, Thai Paraxylene Company Limited Other Organizations/Institutions % of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None - None


066

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT BOARD OF DIRECTORS

Mr. Pichai Chunhavajira

Mr. Naris Chaiyasoot

Age 61 Yrs.

Age 55 Yrs.

DIRECTOR (NON-EXECUTIVE)

DIRECTOR (NON-EXECUTIVE)

Education

• BA in Accounting, Thammasat University • MBA. (Business Administration), Indiana University of Pennsylvania, USA • Honorary Degree Doctor of Philosophy (Accounting), Thammasat University • Doctor of Philosophy (Honorable Financial Management), Mahasarakham University • National Defence College, Joint Public-Private Sector, Class 13, Thailand • Certified Public Accountant, Registration No. 2918

Education

• B.A. Economics (Hon.), Thammasat University • M.A. Economics (English Program), Thammasat University • Ph.D Economics, University of Hawaii, USA

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

Mr. Surong Bulakul

Mr. Viroj Mavichak

Age 54 Yrs.

Age 61 Yrs.

DIRECTOR (EXECUTIVE), SECRETARY TO THE BOARD

AND CHIEF EXECUTIVE OFFICER

067

DIRECTOR (EXECUTIVE), SECRETARY TO THE BOARD AND MANAGING DIRECTOR (Retired from 30 September, 2009)

Education

• B.Sc. in Industrial Engineering and Operations Research, Syracuse University, USA • M.Eng. in Operations Research, Cornell University, USA • MBA., Cornell University, USA

Education

• B.Sc. in Civil Engineering (Hons), Chulalongkorn University • M.Sc. in Civil Engineering, University of Texas at Austin, USA • Ph.D. in Civil Engineering, University of Texas at Austin, USA • Program for Management Development, Harvard University, USA

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

• Certificate in Director Accreditation Program (DAP 32/2005) • Certificate in Finance for Non-Finance Director (FND 19/2005) Training for the Directors courses of Thai Institute of Directors • Certificate in Director Certification Program (DCP 82/2006) Association, Thailand (IOD) • Certificate in Director Accreditation Program (DAP 49/2006) Other Training • Certificate in Director Certification Program (DCP 110/2008) • Certificate in Population Studies, University of Hawaii, USA Other Training • Certificate in National Defence College, Class 39 • Capital Market Academy Leadership Program, • Certificate in Capital Market Academy Leadership Program, Capital Market Academy, Class 5 Capital Market Academy, Class 4 Working Experience in the 5 preceding years: Working Experience in the 5 preceding years 2000-2002 Chairman, Thappline Company Limited 2003-2006 Director-General, Fiscal Policy Office,

2001-2007 Senior Executive Vice President, Corporate Finance & Ministry of Finance Accounting, PTT Public Company Limited 2003-2004 Acting President, Bangchak Petroleum Public Company Limited 2006-2007 Inspector-General, Ministry of Finance 2005-2009 Director, PTT Chemical Public Company Limited 2008-2009 Chief Inspector-General, Ministry of Finance 1996-2009 Director, Dhipaya Insurance Public Company Limited 2009-Present Deputy Permanent Secretary, Ministry of Finance 2007-2009 Director, PTT Aromatics and Refining Public Company Limited 2008-2009 Chief Financial Officer, PTT Public Company Limited Present Positions 2003-2008 Director and Audit Committee Member,

Listed Company (1) Siam Commercial Bank Public Company Limited • Director, PTT Public Company Limited

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

Public Company (1)

Present Positions Listed Company - None Public Company (1)

• Director, PTT Public Company Limited • Director, IRPC Public Company Limited • Director, Bangchak Petroleum Public Company Limited • Director, PTT Exploration and Production Public Company Limited • Director, Thai Airways International Public Company Limited Public Company (1) • Director, Thai Lube Base Public Company Limited Limited Company (2) • Director, Thaioil Power Company Limited • Director, Thaioil Ethanol Company Limited Other Organizations/Institutions (3) • University Council Member of Assumption University • Audit Committee Member, Mahidol University • Vice President and Chairman of the Managerial Accounting Committee, Federation of Accounting Professions

Limited Company (9)

Limited Company (8)

Present Positions Listed Company (5)

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None

Public Company Public Enterprises (1)

- None

• Chairman, Government Housing Bank

Other Organizations/Institutions (8)

• Chairman, National Economics Research Council • President, East West Center and Hawaii Alumni Group of Thailand • President, Thailand Special Olympics • Board member, Thammasat Alumni Association • Board member, Deposit Protection Agency • Board member, Ananthamahidol Foundation, Thammasat Division • Board member, Thammasat University Council • President, Thewphaingarm Parent and Teacher Association

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None

• Certificate in Director Certification Program (DCP 121/2008)

Other Training

• PMD, Harvard University, USA • Certificate in Democratic Politics and Governance,

King Prajadhipok’s Institute • National Defense College, Class 4919

Working Experience in the 5 preceding years

2005-2007 Executive Vice President, International Trading,

PTT Public company Limited 2008-2009 Senior Executive Vice President International Trading Business Unit, PTT Public Company Limited Present Positions Listed Company (1)

• Senior Executive Vice President, Chief Operating Officer, PTT Public Company Limited

• Director, Thai Lube Base Public Company Limited

• Director, Thai Lube Base Public Company Limited • Chairman, PTT International Trading DMCC • Chairman, PTT International Trading Pte. Ltd. • Director, PTT Green Energy Company Limited. • Director, PTT Polymer Marketing Company Limited • Director, Thaioil Marine Company Limited • Director, Independent Power (Thailand) Company Limited • Director, Thai Paraxylene Company Limited • Director, Thaioil Energy Solutions Company Limited • Director, Thaioil Ethanol Company Limited

Other Organization/Institutions % of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

• Certificate in Director Accreditation Program (DAP 1/2003) • Certificate in Director Certificate Program (DCP 38/2003) Other Training - None Working Experience in the 5 preceding years 1999-2005 Managing Director, National Petrochemical Public Company Limited Chairman, NPTC Maintenance and Engineering Services Company Limited Director, Thai Tank Terminal Company Limited Director, PTT Phenol Company Limited Director, PTT Utility Company Limited Director, PTT Polymer Marketing Company Limited 2006-2009 Director and Managing Director, Thai Oil Public Company Limited Director, Maesod Clean Energy Company Limited 2008-2009 Director, Sak Chaisidhi Company Limited

- None 0.0032 - None - None - None

• Chairman and Managing Director,

Thaioil Energy Solutions Company Limited • Chairman, Thai Paraxylene Company Limited • Director, Independent Power (Thailand) Company Limited • Director, Thaioil Power Company Limited • Chairman, Thaioil Marine Company Limited • Director, Thaioil Solvent Company Limited • Chairman, TOP Solvent Company Limited • Director, Thaioil Ethanol Company Limited Other Organizations/Institutions (3) • Director, Offshore Technology and Management, Asian Institute of Technology • Member of Council of Trustees, Petroleum Institute of Thailand (PTIT) • Council Committee of Engineering Alumni, Chulalongkorn University % of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

0.0014 - None - None - None


068

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT BOARD OF DIRECTORS

Mr. Chakramon Phasukavanich

Age 66 Yrs.

Age 62 Yrs.

Age 56 Yrs.

Education

Education

Education

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND CHAIRMAN OF THE AUDIT COMMITTEE (Completed the term at 2009 Annual General Meeting of Shareholders)

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND CHAIRMAN OF THE NOMINATION AND REMUNERATION COMMITTEE (Completed the term at 2009 Annual General Meeting of Shareholders)

• B.Sc. in Economics, University of Hawaii, USA • M.A. (Political Science), University of Hawaii, USA

• Certificate in Role of Chairman Program (RCP 2005) • Certificate in Director Accreditation Program (DAP 66/2007) • Certificate in Audit Committee Continuing and Development Program (ACP 24/2008)

Other Training

• National Defense College, Class 35, Thailand • Capital Market Academy Leadership Program, Capital Market Academy, Class 5

Working Experience in the 5 preceding years

2005-2007 Deputy Director, GFMIS Office of the Prime Minister 2004-2009 Independent Director and Chairman of the

Audit Committee, Thai Oil Public Company Limited Present Positions Listed Company (2)

• Chairman, TCJ Asia Public Company Limited • Chairman, GJ Steel Public Company Limited Public Company

Limited Company Other Organizations/Institutions (3)

• Director, The Stock Exchange of Thailand • Chairman, Capital Market Development Fund Foundation • Advisor, Unithai Line Public Company Limited

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

Dr. Nit Chantramonklasri

Mr. Nibhat Bhukkanasut

- None - None

- None - None - None - None

• B.A. in Economics, Chulalongkorn University, Thailand • M.A. in Economics, California State University in Northridge, USA • Certificate in Director Accreditation Program (DAP 20/2004) • Certificate in Financial for Non-Finance Director (FND 13/2004) • Certificate in Audit Committee program (ACP 14/2006) • Certificate in Director Certification Program (DCP 71/2006)

Other Training

• Certificate of Senior Executive Development Program, Class 12, Thailand • National Defense College, Class 39, Thailand

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

Training for the Directors courses of Thai Institute of Directors Association, Thailand (IOD)

• Certificate in Director Accreditation Program (DAP 19/2004) • Certificate in Director Certification Program (DCP 66/2005) • Certificate in Finance for Non-Finance Director (FND 14/2005) • Certificate in Audit Committee Program (ACP 14/2006)

- None

Working Experience in the 5 preceding years

Present Positions Listed Company (1)

• Member, Monetary Policy Committee, Bank of Thailand • Member of the Council of State, (Chamber 5)

• B.Sc. in Electrical Engineering, Chulalongkorn University, Thailand • M.Sc. and Ph.D. in Industrial and Energy Technology Policy and Technology Management, Science Policy Research Unit, University of Sussex, United Kingdom

2002-2004 Secretary General, National Economic and Social Development Board 2004-2008 Permanent Secretary, Ministry of Industry 2004-2009 Independent Director and Chairman of the Nomination and Remuneration Committee, Thai Oil Public Company Limited • Director, PTT Public Company Limited

Other Training

Working Experience in the 5 preceding years

Public Company Limited Company Other Organizations/Institutions (2)

INDEPENDENT DIRECTOR (NON-EXECUTIVE) AND MEMBER OF THE AUDIT COMMITTEE (Completed the term at 2009 Annual General Meeting of Shareholders)

- None - None

2003-2006 Independent Director, National Energy Fund Administration 2004-2006 Director, National Science and Technology Committee (Board of NSTDA) 2003-2007 Director and Nominating Committee Member,

The Aromatics (Thailand) Public Company Limited 2004-2009 Independent Director and Member of the Audit Committee, Thai Oil Public Company Limited

Present Positions Listed Company - None Public Company - None Limited Company (3) - None

• Director, Thaioil Solvent Company Limited • Director, TOP Solvent Company Limited • Director, Cellenium (Thailand) Company Limited

Other Organizations/Institutions (2) - None - None - None - None

• Independent Director, Energy Fund, MFC Asset Management Public Company Limited • Honorable Advisor, SME Venture Capital Fund

% of Shareholding Conflict of Interest Relation among family with the Company Dispute in the 10 preceding years

- None - None - None - None

069


Thaioil

Thaioil

36 Mr. Porn-in Manmalai // 37 Ms. Pattaralada Sa-ngasang // 38 Ms. Bhawana Suphavilai // 39 Mr. Yuthana Pasurapunya // 40 Mr. Watchara Mattanapotchanart // 41 Mr. Viroj Meenaphant // 42 Ms. Siriporn Mahajchariyawong // 43 Mr. Santi Wasanasiri // 44 Mr. Suchart Monyanont // 45 Mr. Supon Chalermkiatkul // 46 Mr. Athavuth Vikitsreth // 47 Ms. Acharee Tiyabhorn // (27)

Name

1 Mr. Somnuk Kyavatanakij v 2 Mr. Prasert Bunsumpun 3 3 Mr. Manu Leopairote (4) 3 4 Mr. Utid Tamwatin (4) 3 5 Mr. Prajya Phinyawat 3 6 Mr. Naris Chaiyasoot (4) 3 7 Mr. Pichai Chunhavajira 3 8 Mr. Apisak Tantivorawong 3 9 Gen. Prayut Chan-O-Cha 3 10 Mr. Krairit Nilkuha 3 11 Mr. Chaikasem Nitisiri 3 12 Ms. Puongpech Sarakun 3 13 Mr. Nontigorn Kanchanachitra 3 14 Mr. Banphot Hongthong 3 3 / (5) 15 Mr. Surong Bulakul 16 Mr. Somkeirt Hudthagosol // 17 Mr. Chaiwat Damrongmongkolgul // 18 Mr. Narongrit Tavornvisitporn // 19 Mr. Wirat Uanarumit // 20 Mr. Somchai Wongwattanasan // 21 Mr. Sukrit Surabotsopon (16) // 22 Mr. Suphon Tubtimcharoon // 23 Mr. Abhinant Supatrabutra // 24 Mr. Mitri Reodacha // 25 Mr. Teardchart Padungrat // 26 Mr. Nitas Krongvanitchayakul // 27 Mr. Somchai Jiranuntarat // 28 Mr. Klahan Tochamnanvit (24) // 29 Mr. Kosol Pimthanothai // 30 Mr. Danu Benjapolchai // 31 Ms. Duangporn Teerapabpaisit // 32 Mr. Bowon Vongsinudom (25) // 33 Mr. Bandhit Thamprajamchit // 34 Ms. Prapin Thongnium // 35 Mr. Pongpun Amornvivat //

Name

TPX

/

3 (7)

3

3 (6)

3

3 (2)

TPX

/

TLB

3

3

3

3

3 (7)

3

3

v

TLB

/

3

TP

3

3

3

v(3)

TP

/

IPT

3

3 (11)

3

3 (8)

v

IPT

3 (12) 3 (9)

3 3 (18)

3

3 (12)

3

3 (12)

3

3 (9)

TES (1)

3

TM

// (26)

TES (1)

Subsidiaries

3

/

3 (21)

3

3

3

TM

Subsidiaries

/

TOS

3

3

TOS

TS *

/

3 (19)

3

3

TS *

3 (20)

3

3 (14)

3

3

3

3

/

SAKC **

SAKC **

TET

/

3 (22)

3

3

3 (10)

3

TET

3

3

Affiliates

Thappline PTTICT

Thappline PTTICT

Affiliates

MCE

3 (23)

3 (15)

3 (13)

MCE

(2) Appointed as Director of Thai Paraxylene Co., Ltd. at the Board of Directors Meeting no. 6/2009 on November 13, 2009. (3) Appointed as Chairman of the Board of Thaioil Power Co., Ltd. at the Board of Directors Meeting no. 1/2009 on February 24, 2009, effective after the 2009 Annual General Meeting of Shareholders on April 21, 2009. (4) Appointed as Director of Thai Oil Plc. at the 2009 Annual General Meeting of Shareholders on April 3, 2009. (5) Appointed as Director and Chief Executive Officer of Thai Oil Plc. at the Board of Directors Meeting no. 6/2009 on September 25, 2009, effective from October 1, 2009 onwards. (6) Appointed as Director of Thai Paraxylene Co., Ltd. at the Board of Directors Meeting no. 2/2009 on April 23, 2009. (7) Appointed as Director of Thai Lube Base Co., Ltd. at the 2009 Annual General Meeting of Shareholders on April 29, 2009. (8) Appointed as Director of Independent Power (Thailand) Co., Ltd. at the Board of Directors Meeting no. 2/2009 on April 21, 2009. (9) Appointed as Director of Thaioil Energy Solutions Co., Ltd. at the Extraordinary Meeting of Shareholders no. 1/2009 on December 3, 2009. (10) Appointed as Director of Thaioil Ethanol Co., Ltd. at the Extraordinary Meeting of Shareholders no. 1/2009 on October 30, 2009. (11) Appointed as Director of Independent Power (Thailand) Co., Ltd. at the 2009 Annual General Meeting of Shareholders on April 21, 2009. (12) Appointed as Director of Thaioil Energy Co., Ltd. at the 2009 Annual General Meeting of Shareholders on February 27, 2009. (13) Appointed as Director of Maesod Clean Energy Co., Ltd. at the Board of Directors Meeting no. 3/2009 on October 20, 2009. (14) Appointed as Director of Sak Chaisidhi Co., Ltd. at the 2009 Annual General Meeting of Shareholders on April 24, 2009. (15) Appointed as Director of Maesod Clean Energy Co., Ltd. at the Board of Directors Meeting no. 2/2009 on July 1, 2009. (16) Assigned to PTT Plc. from February 1, 2009. (17) Appointed as Director and Managing Director of Thai Paraxylene Co., Ltd. at the Board of Directors Meeting no. 3/2009 on May 26, 2009, effective from June 1, 2009. (18) Appointed as Director of Thaioil Energy Co., Ltd. at the Board of Directors Meeting no. 2/2009 on July 30, 2009, effective from August 1, 2009. (19) Appointed as Director and Managing Director of TOP Solvent Co., Ltd. at the Extraordinary Meeting of Shareholders no. 1/2009 on September 14, 2009, effective after registration with the Ministry of Commerce on September 17, 2009. (20) Appointed as Director of Sak Chaisidhi Co., Ltd. at the Extraordinary Meeting of Shareholders no. 1/2009 on December 25, 2009. (21) Appointed as Director of Thaioil Marine Co., Ltd. at the 2009 Annual General Meeting of Shareholders on April 17, 2009, and appointed as Managing Director at the Board of Directors Meeting no. 2/2009 on April 21, 2009, effective from May 1, 2009. (22) Appointed as Executive Officer of Thai Oil Plc. and as Managing Director of Thaioil Ethanol Co., Ltd. on January 5, 2009. Appointed as director of Thaioil Ethanol Co., Ltd. at the 2009 Annual General Meeting of Shareholders on February 23, 2009. (23) Appointed as Director of Maesod Clean Energy Co., Ltd. at the Board of Directors Meeting no. 1/2009 on March 4, 2009. (24) Assigned to PTT Plc. from October 1, 2006. (25) Assigned to PTT Plc. from March 1, 2006. (26) Appointed as Deputy Managing Director of Thaioil Energy Co., Ltd. on February 1, 2009. (27) Appointed as Executive Officer of Thai Oil Plc. on September 25, 2009. * TOP Solvent Co., Ltd. is a subsidiary of Thaioil Solvent Co., Ltd., in which Thaioil holds 100% of shares. ** Sak Chaisidhi Co., Ltd., is a subsidiary of TOP Solvent Co., Ltd., holding 80.52% of shares.

Note: v = Chairman 3= Director / = Managing Director or Chief Executive Officer // = Executive Officer (1) Changed the company’s name from Thaioil Energy Co., Ltd. to “Thaioil Energy Solutions Co., Ltd.” according to the resolution of Extraordinary Meeting of Shareholders no. 1/2009 on December 3, 2009.

Information of Directors and Executive Officers and Control Executives as of December 31, 2009

070 THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT BOARD OF DIRECTORS

071


072

073

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT ORGANIZATION CHART

Organization Chart As of December 31, 2009

Board of Directors Chief Executive Officer Surong Bulakul

Audit Committee Internal Systems Audit Manager

President Somkeirt Hudthagosol Deputy Managing Director Business Somkeirt Hudthagosol (Act.)

Deputy Managing Director Finance Wirat Uanarumit

Deputy Managing Director Refinery Chaiwat Damrongmongkolgul Managing Director - TLB Managing Director - TPX Managing Director - TM Managing Director - IPT Managing Director - TP Managing Director - TS Managing Director - TET

Assistant Managing Director Refinery Narongrit Tavornvisitporn Technology Manager Bandhit Thamprajamchit

Human Resources Manager Kosol Pimthanothai

Corporate Commercial Planning Manager Pongpun Amornvivat

Operations Manager Yuthana Pasurapunya

Organization Development & Business Improvement Manager Santi Wasanasiri

Operations Support Manager Athavuth Vikitsreth

Product & Quality Manager Narongrit Tavornvisitporn (Act.)

Business Development Manager Duangporn Teerapabpaisit

Accounting Manager Prapin Thongnium

Commercial Manager Acharee Tiyabhorn (Act.)

Strategic Planning Manager Pattaralada Sa-ngasang

Treasurer Siriporn Mahajchariyawong

Remarks : Management - care of Chief Executive Officer : 1/3/2006 : Bowon V. Department Manager (SA-3) assignment at PTT 1/10/2006 : Klahan T. Department Manager (SA-5) assignment at PTT 3/11/2008 : Abhinant S. Assistant Managing Director (SA-1) assignment at TLB 3/11/2008 : Mitri R. Assistant Managing Director (SA-4) assignment at IPT and 15/12/2008 additional assignment at TP 1/2/2009 : Sukrit S. Assistant Managing Director (SA-8) assignment at PTT 1/2/2009 : Bhawana S. Department Manager (SA-9) assignment at TE 1/5/2009 : Nitas K. Department Manager (SA-7) assignment at TM 1/6/2009 : Suphon T. Assistant Managing Director (SA-2) assignment at TPX 1/9/2009 : Teardchart P. Acting Department Manager (SA-6) assignment at TS

Assistant Managing Director Corporate Affairs Somchai Wongwattanasan

Asset Development Manager Porn-in Manmalai

Engineering Manager Suchart Monyanont Total Quality Management Manager Danu Benjapolchai

Corporate Management Office Manager Viroj Meenaphant


074

075

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT MANAGEMENT

076

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT MANAGEMENT

Management

As of December 31, 2009

9.

7.

5.

4.

3. 1.

1. Surong Bulakul Chief Executive Officer 2. Somkeirt Hudthagosol President Deputy Managing Director - Business (Act.) 3. Chaiwat Damrongmongkolgul Deputy Managing Director - Refinery 4. Wirat Uanarumit Deputy Managing Director - Finance 5. Narongrit Tavornvisitporn Assistant Managing Director - Refinery Product & Quality Manager (Act.)

6.

8.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22. 23.

24.

25.

26.

27.

28.

29.

2.

6. Somchai Wongwattanasan Assistant Managing Director - Corporate Affairs 7. Suphon Tubtimcharoon Assistant Managing Director - Assignment as Managing Director, Thai Paraxylene Co., Ltd. 8. Abhinant Supatrabutra Assistant Managing Director - Assignment as Managing Director, Thai Lube Base Plc. 9. Mitri Reodacha Assistant Managing Director - Assignment as Managing Director, Independent Power (Thailand) Co., Ltd. & Thaioil Power Co., Ltd.

10. Kosol Pimthanothai Human Resources Manager 11. Duangporn Teerapabpaisit Business Development Manager 12. Danu Benjapolchai Total Quality Management Manager 13. Teardchart Padungrat Acting Department Manager - Assignment as Managing Director, TOP Solvent Co., Ltd.

14. Nitas Krongvanitchayakul Department Manager - Assignment as Managing Director, Thaioil Marine Co,. Ltd. 15. Bandhit Thamprajamchit Technology Manager 16. Prapin Thongnium Accounting Manager 17. Pongpun Amornvivat Corporate Commercial Planning Manager 18. Porn-in Manmalai Asset Development Manager 19. Pattaralada Sa-ngasang Strategic Planning Manager

20. Bhawana Suphavilai Department Manager - Assignment as Deputy Managing Director, Thaioil Energy Solutions Co., Ltd. 21. Yuthana Pasurapunya Operations Manager 22. Watchara Mattanapotchanart General Manager, TOP Solvent Co., Ltd. 23. Viroj Meenaphant Corporate Management Office Manager 24. Siriporn Mahajchariyawong Treasurer

25. Somchai Jiranuntarat Managing Director, Thaioil Ethanol Co., Ltd. 26. Santi Wasanasiri Organization Development & Business Improvement Manager 27. Suchart Monyanont Engineering Manager 28. Supon Chalermkiatkul Managing Director, Sak Chaisidhi Co., Ltd. 29. Athavuth Vikitsreth Operations Support Manager 30. Acharee Tiyabhorn Commercial Manager (Act.)

30.


078

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT SHAREHOLDING AND MANAGEMENT STRUCTURE

079

Shareholding and Management Structure Shareholding Structure Company Assets

• Common Shares The closing date of the share registers for payment of interim dividend, as of the 4th of September, 2009,

the Company’s registered capital was 20,400,278,730 baht and the paid-up capital was 20,400,278,730 baht, comprised of 2,040,027,873 commom shares at the par value at 10 baht per share. • Debentures The Company has a 10-year unsecured USD bond of US$ 350 million with a single reimbursement maturing

on June 9, 2015, and three senior unsecured baht bonds of 17,750 million baht in total. The first is a 2,750 million baht bond due in 2013, the second is a 3,000 million baht bond due in 2012, and a 12,000 million baht bond due in 2014.

Management

Shareholders

As of the 4th of September 2009, the first ten major shareholders, including shareholding as provided in Section 258 of the Securities and Exchange Act B.E. 2535, are as follows:  

Top Ten Major Shareholders (1)

1 2 3 4 5 6 7 8 9 10

PTT PUBLIC COMPANY LIMITED (2) NIPPON OIL CORPORATION STATE STREET BANK AND TRUST COMPANY HSBC (SINGAPORE) NOMINEES PTE. LTD. STATE STREET BANK AND TRUST COMPANY FOR LONDON IRPC PUBLIC COMPANY LIMITED J.P. MORGAN BANK LUXEMBOURG S.A.4 GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION THE BANK OF NEW YORK (NOMINEES) LIMITED GOVERNMENT PENSION FUND

Total

Number of Shares

1,001,647,483 36,137,200 35,532,061 34,169,074 21,780,600 18,000,000 12,000,000 11,943,900 11,040,594 10,411,400 1,192,662,312

Shareholding Percentage

49.10 1.77 1.74 1.67 1.07 0.88 0.59 0.59 0.54 0.51 58.46

Remarks: (1) Excluding shareholders of Thai NVDR Co., Ltd., a subsidiary of the Stock Exchange of Thailand with the objective of promoting investor investment, particularly international investors, in order to invest in common stock of listed companies without being restricted by the foreign shareholding limit which does not have the right to vote at meetings of listed companies. (2) PTT Plc. as a major shareholder of Thaioil, participates in formulating the Company’s management and operational policies through approval of the Board of Directors. As of yearend 2009, there were 5 directors from a total of 15 who are also holding position as PTT Plc. Board of Directors and/or Management Team

Dividend Policy

The present dividend payout policy of the Board of Directors is to pay at least 25 percent of the consolidated net profit after deductions of all categories of reserves as specified in the Company Regulations and applicable laws. Payment of such dividend is subjected to the cash flows and investment plans of Thaioil and Thaioil subsidiaries in each year, and other requirements and considerations as determined by the Board of Directors. The Board of Directors may consider paying the annual dividend with approval from the AGM, except payment of interim dividend which the Board is authorized to approve periodically when the Company’s profit deems it appropriate. The interim dividend payment shall be reported at the following shareholders meeting. The dividend policy for Thaioil subsidiaries shall be considered and proposed by the Board of Directors of each subsidiary to the AGM for approval. Consideration shall be given to investment plans and other requirements and considerations, such as the adequacy of cash flow of its subsidiaries after deducting reserve funds in accordance with the law.


080

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT SHAREHOLDING AND MANAGEMENT STRUCTURE

Management Structure

The List of Directors who completed their terms and resigned during the year 2009 is as following details:

The management structure of Thaioil Public Company Limited comprises of: • The Board of Directors • The 3 Sub - Committees, supporting the consideration of important issues as assigned by the Board of Directors, are the Audit Committee, the Nomination and Remuneration Committee and the Corporate Governance Committee and another committee consists of management team-the Risk Management Committee • The Management with the Chief Executive Officer as the highest executive of the Company

Name

1. Mr. Somnuk

Position

Kyavatanakij

Independent Director Chairman of the Board 2. Mr. Manu Leopairote Independent Director Chairman of the Audit Committee 3. Mr. Krairit Nilkuha Independent Director Member of the Audit Committee 4. Mr. Chaikasem Nitisiri Independent Director Member of the Audit Committee 5. Mr. Utid Tamwatin Independent Director Member of the Audit Committee 6. Mr. Nontigorn Kanchanachitra Independent Director Chairman of the Nomination and Remuneration Committee 7. Miss Puongpech Sarakun Independent Director Member of the Nomination and Remuneration Committee 8. Mr. Prasert Bunsumpun Director Member of the Nomination and Remuneration Committee 9. Gen. Prayut Chan-O-Cha Independent Director Chairman of the Corporate Governance Committee 10. Mr. Apisak Tantivorawong Independent Director Member of the Corporate Governance Committee 11. Mr. Banphot Hongthong Independent Director Member of the Corporate Governance Committee 12. Mr. Prajya Phinyawat Director Member of the Corporate Governance Committee 13. Mr. Pichai Chunhavajira Director 14. Mr. Naris Chaiyasoot Director 15. Mr. Surong Bulakul (1) Director Secretary to the Board Chief Executive Officer

Reasons for Leave

1. Mr. Nibhat Bhukkanasut (Independent Director and Chairman of the Audit Committee) 2. Mr. Nit Chantramonklasri (Independent Director and Member of the Audit Committee) 3. Mr. Chakramon Phasukavanich (Independent Director and Chairman of the Nomination and Remuneration Committee 4. Mr. Viroj Mavichak (Director and Secretary to the Board)

The Board of Directors

There were 15 directors serving in 2009 as followed: • 14 non-executive directors, of which, 10 were independent directors • 1 executive director, namely the Chief Executive Officer The Board of Directors as of December 31, 2009 comprised of:

Name

081

Completed his term as Director at the AGM 2009 on April 3, 2009 and was not re-elected Completed his term as Director at the AGM 2009 on April 3, 2009 and was not re-elected Completed his term as Director at the AGM 2009 on April 3, 2009 and was not re-elected Retired on September 30, 2009

Shareholding Report of the Board of Directors in 2008 and 2009 Appointed Date

April 4, 2008

Name

April 3, 2009 April 10, 2007

31 Dec. 08

April 3, 2009

1. Mr. Somnuk Kyavatanakij 2. Mr. Manu Leopairote 3. Mr. Krairit Nilkuha 4. Mr. Chaikasem Nitisiri 5. Mr. Utid Tamwatin 6. Mr. Nontigorn Kanchanachitra 7. Miss Puongpech Sarakun 8. Mr. Prasert Bunsumpun 9. Gen. Prayut Chan-O-Cha 10. Mr. Apisak Tantivorawong 11. Mr. Banphot Hongthong 12. Mr. Prajya Phinyawat

April 3, 2009 April 3, 2009 October 1, 2009 (replace Mr. Viroj Mavichak)

13. Mr. Pichai 14. Mr. Naris 15. Mr. Surong

April 4, 2008 April 3, 2009 April 4, 2008 April 4, 2008 April 10, 2007 April 10, 2007 April 10, 2007 October 1, 2008

Remark: (1) The Board of Directors in Meeting No. 6/2009 on Friday, September 25, 2009, approved the appointment of Mr. Surong Bulakul as Director and Chief Executive Officer (CEO) effective from October 1, 2009 onward, to replace Mr. Viroj Mavichak, Director and Managing Director of

the Company who retired on September 30, 2009.

Chunhavajira Chaiyasoot Bulakul

No. of Shares Addition (Reduction) 31 Dec. 09

No. of Shares

Remark

During the Year

- - 12,000 - - - - - - - - 147,500

- 31,000 12,000 - - - - - - - - -

1,000 - -

1,000 - 64,700

- - Appointed as Director in 2009 - - - - - - - - - (147,500) Shares were sold on September 16, 2009 - - - Appointed as Director in 2009


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT SHAREHOLDING AND MANAGEMENT STRUCTURE

1. Structure of the Board of Directors

3. Authorized Directors

According to the Company’s Articles of Association, the Board of Directors shall consist of not less than five (5) members but not more than fifteen (15) members. At least half of the directors must reside in Thailand and can either be shareholders of the company or not.

2. Appointment and Vacating of Directors

The nomination, appointment, removal and resignation of directors are prescribed in the Company Regulation, which can be summarized as follows: Appointment of Company Directors The shareholders meeting shall appoint directors according to the following principles and procedures. (1) Each shareholder shall be entitled to one vote for each share; (2) Each shareholder shall be entitled to cast all the vote under (1) for as many nominees as there are directors

to be elected but cannot distribute the votes among nominees; (3) Nominees who receive the largest number of votes in descending order shall be elected. In the event of

nominees receiving equal votes and exceeding the number of vacancies to be filled, the chairman of the

meeting shall cast the deciding vote. Since 2007, the Board of Directors has approved the Company to provide opportunity to minor shareholders to nominate qualified persons for the election as directors prior to the AGM in accordance with the company’s criteria. Last year, there was no nomination proposed (see detail on page 107).

Removal, Retirement, Resignation etc.

• At every AGM, one-third (1/3) of the directors, or, if the number of directors cannot be divided exactly into three parts, the number nearest to one - third (1/3) shall retire. A vacating director may be

re-appointed. The directors to vacate office in the first and second years following the registration as a public company shall be drawn by lots. In subsequent years, the directors who have remained in office for the longest time shall retire from office. • Apart from retirement as per normal office term, directors shall vacate office upon death; resignation; lack of qualifications or disqualifications under the law pertaining to public company and/or the Securities and Exchange Act; removal pursuant to a resolution at the shareholders meeting; or court order. • Any director who wishes to resign from office must submit a letter of resignation to the Company. The resignation shall be effective on the date the Company receives the letter. The director who wishes to resign may also inform the registrar of the facts. • Removal of a director from office before the end of term shall require a resolution of shareholders by not less than three-fourths (3/4) of the total votes of shareholders attending the meeting and eligible to vote and not less than one-half of the total number of shares held by shareholders attending the meeting and eligible to vote. • In the event that a position of director becomes vacant for any reason other than the end of his office term, the board of directors shall on the next board meeting appoint a qualified person, not having unacceptable qualities under the laws pertaining to public limited company and the securities and exchange act to be a new director, except if such office term remaining is less than two (2) months. The replacement director shall hold office only for the remainder of the term of office of the director whom he replaces. The resolution of the board of directors pursuant to the first paragraph must be approved by the votes of not less than three-fourths (3/4) of the number of the remaining directors.

083

In accordance with the Company’s regulations, two (2) authorized directors shall jointly sign with affixation of the company seal to represent the Company. The Board has the right to prescribe and rectify the list of the Company’s authorized directors. Through the Meeting No. 6/2009 on September 25, 2009, the Board of Directors has approved directors having authority to sign on behalf of the Company, namely Mr. Somnuk Kyavatanakij, Mr. Prajya Phinyawat, Mr. Manu Leopairote, and Mr. Surong Bulakul. The signatures of any two of four of representative directors jointly sign together with the affixation of the Company’s seal.

4. Board Roles and Responsibilities

The Board of Directors is to manage the Company’s business and affairs in compliance with laws, objectives, regulations, and shareholder resolutions. The roles and responsibilities of the Board of Directors can be summarized as follows: Roles and Responsibilities in accordance to Company’s regulations • Manages the Company’s business and affairs in compliance with laws, objectives, regulations and shareholder resolutions by upholding integrity and the best interests of the Company and shareholders. • Elects one member as Chairman of the Board. If the Board of Directors considers it appropriate, one director or more may be elected as Vice Chairmen. The role of the Vice Chairman is defined in the Company Regulations with regard to activities assigned by the Chairman. • Meets at least once every three months and may hold additional meetings as required. In 2009, the Company had a policy for the Board of Directors to meet every month with the exception that there was major events or necessity for the cancellation. In 2009, the Board of Directors met 8 times. (See detail in the Meeting of the Board of Directors, year 2009, on page 89) Duties under the Corporate Governance Policy • Reviews and approves activities as per the laws/regulations. • Jointly reviews and establishes the corporate vision with the Management for the best interest of Company, shareholders, and all stakeholders with dedication and diligence. • Reviews and approves key strategies and policies, including objectives, financial targets, risks, work plans, and budgets, as well as oversees that management follow the established policies and plans effectively and efficiently. • Regularly evaluates the performance of the Chief Executive Officer and approves on his remuneration proposed by the Nomination and Remuneration Committee endorsement. • Assigns the Audit Committee to review the accounting system and financial reporting as well as oversees that a process is in place to effectively and efficiently evaluate the competence of internal control and internal audit systems. • Assigns the Audit Committee to review the risk management policy to ensure it extends across the organization and is practiced by management, and reports to the Board of Directors. • Be alert to and resolves potential conflict of interest among stakeholders; establishes guidelines for transactions that may conflict with the interests of the Company and shareholders; and establishes procedures for the complete and adequate disclosure of transactions that may have a conflict of interest. • Establishes and approves the written corporate governance policy and business ethics. The Company shall propose a review of the corporate governance policy and shall evaluate performance in practicing such policy once a year.


084

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT SHAREHOLDING AND MANAGEMENT STRUCTURE

Sub -Committees

6. Selects and recommends the appointment of independent auditors and set their fees giving consideration to reliability and adequacy of resources, and amount of audit work by such independent auditors, including experiences of personnel assigned to audit the Company’s accounts as well as arranging meetings with the Company’s auditors without attendance of executive management at least once a year. 7. Reviews accuracy and effectiveness of information technology associated with financial reports and internal controls. 8. Promotes development of financial reporting system to international accounting standards. 9. Reviews the internal audit plan according to internationally accepted methods and standards. 10. Considers the independence of the Internal Audit Systems and advises regarding the budget and manpower of the Internal Audit Systems. Grant approval to appoint, rotate, and discontinue employment of the Internal Audit Systems Manager as well as evaluate annual performance. 11. Prepares the Audit Committee report signed by the Chairman of the Audit Committee for disclosure in the Company’s annual report according to principles prescribed by SET. 12. The Audit Committee may seek independent opinions from professional advisors when needed under the Company’s expense with approval from the Board. The employment of advisors must comply with the Company’s regulations. 13. Chairman and members of the Audit Committee shall attend the AGM in order to clarify issues associated with the Audit Committee or appointment of the independent auditors. 14. Reviews and modifies the charter of the Audit Committee. 15. Performs other tasks as assigned by the Board of Directors within the roles and responsibilities of the Audit Committee.

To ensure good governance of the Company according to good corporate governance principles of SET, the Board of Directors has appointed various committees to oversee specific issues and to ensure that various activities of the Company comply with the rules and regulations of SET and SEC. The structures of the sub-committees as of December 31, 2009, are as follows:

1. Audit Committee

The Board of Directors has appointed the Audit Committee, with the qualification fully complied by criteria of SET to review business operations, financial reports, and internal control systems, to select independent auditors, and to review conflicts of interest. The members of the Audit Committee have qualified knowledge and experiences to review the reliability of the financial statements. The Audit Committee appointed by the Board of Directors consists of the following 4 non-executive independent directors: Name

1. Mr. Manu

Position

Leopairote (1)

2. Mr. Krairit Nilkuha 3. Mr. Chaikasem Nitisiri 4. Mr. Utid Tamwatin (2)

Chairman of the Audit Committee (Independent) with accounting and financial expertise Member of the Audit Committee (Independent) Member of the Audit Committee (Independent) Member of the Audit Committee (Independent)

Ms. Hasaya Nipatvaranan, Internal Systems Audit Manager, serves as Secretary to the Audit Committee. Remarks: (1) Replaced Mr. Nibhat Bhukkanasut, who completed his term at the 2009 AGM (2) Replaced Mr. Nit Chantramonklasri who completed his term at the 2009 AGM

Roles and Responsibilities of the Audit Committee

1. Reviews the accuracy and reliability of quarterly and annual financial statements as well as adequacy of information disclosure by coordinating with the independent auditors and management responsible for preparing the financial reports. 2. Reviews the adequacy and effectiveness of internal control and internal audit systems for the Company and its affiliates. Provides recommendation to review or examine any transaction considered to be important and necessary. Recommends modifications to improve internal control systems risk management and report to the Board of Directors. 3. Reviews the Company’s compliance with laws governing securities and stock exchange, or requirements of SET, and other laws applicable to the Company’s business. 4. Reviews evidence associated with activities that significantly impact the financial status, the business, or conflict of interest or violations of laws/regulations that affect the operations of the Company. 5. Reviews the accuracy and adequacy of disclosed information on related party transactions or potential conflicts of interest in accordance with the laws and regulations of SET to ensure that the transaction is reasonable and for the best interest of the Company.

Audit Committee Activities in 2009

085

1. Reviewed the quarterly and annual financial statements of 2009 with management, Internal Systems Audit Manager, and independent auditors to ensure the accuracy and reliability of the accounting system and financial reports, and that material information are completely and adequately disclosed in a timely manner according to generally accepted accounting principles and related regulations. 2. Reviewed the adequacy and effectiveness of internal controls and internal audit systems appropriate for the change in circumstances. 3. Reviewed the Company’s compliance with laws governing securities and stock exchange, SET regulations, or other laws applicable to the Company’s business. 4. Reviewed the disclosure of Company information, particularly in the event of related party transactions or potential conflicts of interest, to assure accuracy and completeness. In 2009, the Audit Committee considered the disclosure of information on the transaction regarding the relocation of Bangkok Office to Energy Complex. 5. Reviewed the annual internal audit plan and the audit report of the Company and its affiliates, and gave guidance on work modification to achieve greater effectiveness. 6. Evaluated the annual performance of the Internal Systems Audit Manager. 7. Selected and recommended for appointment the independent auditors and set their fees. 8. Attended meeting with the auditors authorized by the Company without the presence of executive management to obtain the report on the auditor’s performance, remarks, and problems identified during the audit. 9. Reviewed quarterly risk management reports.


086

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT SHAREHOLDING AND MANAGEMENT STRUCTURE

10. Reviewed and amended the Audit Committee Charter according to SEC and SET regulations, the Chart of Audit Committee No. 1/2009 revision, effective from April 3, 2009 onward. 11. Considered the Internal Audit Charter to be used as guidelines for internal audit system. The Internal Audit Charter was approved and became effective from September 23, 2009 onward.

The activities of the Nomination and Remuneration Committee in 2009 are summarized in the report from the Chairman of the Nomination and Remuneration Committee on page 20-21.

2. Nomination and Remuneration Committee

The Nomination and Remuneration Committee appointed by the Board of Directors consisted of 3 non-executive directors, most of whom are independent directors: Name

1. Mr. Nontigorn

Position

Kanchanachitra

Chairman of the Nomination and Remuneration Committee (Independent)

2. Miss Puongpech Sarakun

Member of the Nomination and Remuneration Committee (Independent)

3. Mr. Prasert

Member of the Nomination and Remuneration Committee

Bunsumpun

Mr. Somchai Wongwattanasan, Assistant Managing Director-Corporate Affairs serves as Secretary to the Nomination and Remuneration Committee.

Roles and Responsibilities of the Nomination and Remuneration Committee

Nomination Roles and Responsibilities 1. Establishes procedures and criteria for nominating directors. 2. Establishes qualifications for director nominees with focus on skills, experience, and special expertise that would benefit the Company, available time, and commitment to performing role of director. 3. Selects qualified candidates for nomination as directors and proposes to the Board of Directors for approval at the AGM. 4. Encourages the Company to provide minority shareholders with the opportunity to propose candidates for nomination as directors. 5. Annually reviews the Managing Director succession plan and the list of qualified candidates. 6. Selects qualified directors for appointment as Board committee members and proposes to the Board of Directors for approval upon vacancy. Remuneration Roles and Responsibilities 1. Submits annual recommendation to the Board of Directors with respect to the structure and component of director remuneration. 2. Proposes criteria for reviewing remuneration consistent with the roles and responsibilities of directors in accordance with the Company’s overall performance in order to attract and retain accomplished and qualified directors of high quality and potential. The proposal shall be endorsed by the Board of Directors prior to proposing to the AGM for approval. 3. Evaluates performance and considers appropriate remuneration for the Chief Executive Officer.

087

3. Corporate Governance Committee

The Corporate Governance Committee appointed by the Board of Directors consisted of 4 non-executive directors, most of whom are independent directors:

Name

1. Gen. Prayut 2. Mr. Apisak 3. Mr. Banphot 4. Mr. Prajya

Position

Chan-O-Cha Tantivorawong Hongthong Phinyawat

Chairman of the Corporate Governance Committee (Independent) Member of the Corporate Governance Committee (Independent) Member of the Corporate Governance Committee (Independent) Member of the Corporate Governance Committee

Mr. Viroj Meenaphant, Corporate Management Office Manager, serves as Secretary to the Corporate Governance Committee.

Roles and Responsibilities of the Corporate Governance Committee

1. Formulates the policy for continued development of good corporate governance practices according to international standards as the basis for application by the Company. 2. Formulates the policy for evaluation of the standard of corporate governance within the Company as well as the evaluation outside of the Company, and oversees the evaluation every year. 3. Oversees that the Company complies with principles of good corporate governance of regulatory agencies, namely SET and SEC. 4. Regularly reviews the Company’s corporate governance policy to ensure compliance with international practices and the recommendations of regulatory or associated agencies. 5. Promotes understanding and practice of a good governance culture among management and all levels of employees in Thaioil Group. 6. Provides guidance to working group preparing for corporate governance evaluation by an outside independent organization at least once every three years. 7. Considers and approves the performance evaluation form for the Board of Directors as well as the approval of the assessment results to be presented to the Board of Directors. 8. Be responsible for other assignments assigned by the Board. The summary of Corporate Governance Committee activities in 2009 is shown in the report from the Chairman of the Corporate Governance Committee on page 22-23.

4. Risk Management Committee

Thaioil Group’s risk management committee consists of the Risk Management Steering Committee and

multi-discipline risk management committee. The roles and responsibilities of both committees are seamlessly aligned and support one another to ensure that risks in all core activities throughout Thaioil Group are being managed, and that related and associated risks are identified and addressed.


1/1 1/1 1/1 1/1 1/1 6/6

1/1

3/3 1/3 3/3 3/3 4/4 4/4 4/4 6/6 7/7 6/7 5/6 8/8 7/7 6/8 8/8 5/7 8/8 7/8 8/8 5/8 5/8 6/8 8/8 8/8 7/7 2/2

089

Notes : (1) Appointed as director at the 2009 AGM on April 3, 2009 and was appointed as a member of the Audit Committee (AC) at the BOD meeting no. 2 /2009 on April 29, 2009 and later was appointed as the Chairman of the Audit Committee at the AC meeting no. 2/2009 on May 11, 2009 (2) Appointed as director at the 2009 AGM on April 3, 2009 and was appointed as a member of the Audit Committee at the BOD meeting no. 2/2009 on April 29, 2009 (3) Appointed as the Chairman of the Nomination and Remuneration Committee (NRC) at the NRC meeting no. 3/2009 on September 25, 2009 (4) Appointed as director at the 2009 AGM on April 3, 2009 (5) Appointed as director and Chief Executive Officer at the BOD meeting no. 6/2009 on September 25, 2009, effective from October 1, 2009 (6) Completed his term as director at the 2009 AGM on April 3, 2009 (7) Retired on September 30, 2009

Position Name -Surname

To enable the continuous development of risk management throughout Thaioil Group and the efficient extension to all associated activities of subsidiary companies, the Steering Committee formed risk management committees for various disciplines, namely commercial, refinery, strategic planning and business development, financial, and corporate management. Committee members comprise management and related personnel. The multi-discipline risk management committees have the following roles and responsibilities. 1. Review risks and control measures or mitigation plan proposed by department managers in order to plan and manage disciplinary risks of Thaioil and subsidiary companies in the same direction and consistent with business goals of Thaioil Group. 2. In the event of cross-function risks, the chairmen of each disciplinary risk management committee shall jointly determine a resolution and submit the recommendation to the Risk Management Steering Committee. 3. Report the risks and progress in implementing the risk management plan to the Risk Management Steering Committee. 4. Review the risk register related to the performance of the entire group which affects the business goals of Thaioil and subsidiary companies. In the year under review, the multi - discipline risk management committees performed their duties in managing associated risks in Thaioil Group and recommending risk management measures to the Risk Management Steering Committee. Thaioil Group was able to review organizational risks and manage risks efficiently and monitored the outcomes of risk management within an appropriate period of time.

The Board of Directors and Sub- Committees Meeting Attendance for the Year 2009

Multi-Discipline Risk Management Committee (RMC Discipline)

1 Mr. Somnuk Kyavatanakij Independent Director/Chairman of the Board of Directors (1) 1 Mr. Manu Leopairote Independent Director/Chairman of the Audit Committee 2 Mr. Krairit Nilkuha Independent Director/Member of the Audit Committee 3 Mr. Chaikasem Nitisiri Independent Director/Member of the Audit Committee 4 Mr. Utid Tamwatin (2) Independent Director/Member of the Audit Committee (3) 5 Mr. Nontigorn Kanchanachitra Independent Director/Chairman of the Nomination and Remuneration Committee 6 Miss Puongpech Sarakun Independent Director/Member of the Nomination and Remuneration Committee 7 Mr. Prasert Bunsumpun Director/Member of the Nomination and Remuneration Committee 8 Gen. Prayut Chan-O-Cha Independent Director / Chairman of the Corporate Governance Committee 9 Mr. Apisak Tantivorawong Independent Director/Member of the Corporate Governance Committee 10 Mr. Banphot Hongthong Independent Director/Member of the Corporate Governance Committee 11 Mr. Prajya Phinyawat Director/Member of the Corporate Governance Committee 12 Mr. Pichai Chunhavajira Director (4) 14 Mr. Naris Chaiyasoot Director (5) 15 Mr. Surong Bulakul Director / Secretary to the Board and Chief Executive Officer Directors who completed their term and resigned during the year 2009 1 Mr. Nibhat Bhukkanasut (6) Independent Director/Chairman of the Audit Committee 2 Mr. Nit Chatramonklasri (6) Independent Director/Member of the Audit Committee (6) 3 Mr. Chakramon Phasukavanich Independent Director/Chairman of the Nomination and Remuneration Committee 4 Mr. Viroj Mavichak (7) Director / Secretary to the Board

Board of Directors Meeting

Audit Committee

4 Attendees (7 times/Year)

Nomination & Remuneration Committee

Its role is to drive the risk management effort of Thaioil Group to achieve greater efficiency in all activities and to support the embedment of risk management into the organizational culture to realize set goals. The Risk Management Steering Committee is composed of senior management members of Thaioil Group. The following activities were undertaken by the Committee in 2009: 1. Promoted the alignment of risk management throughout Thaioil Group, which resulted in the effectiveness of risk management, after assessment by an independent consultant. 2. Reviewed key risk exposures in various disciplines; supported the modification of measures to manage disciplinary and organizational risks; and supported the use of risk information management tools to enhance the efficiency and reliability of data in the decision-making of executives at appropriate times. 3. Supported the strategy to link risk management to performance evaluations of staff at every level for integration into the organizational culture. 4. Supported the risk management training programs and Control Self Assessment and Internal Control to all employees within Thaioil Group in order to enhance their knowledge and understanding of the Risk Management and identify mitigation measures, which will lead to the sustainable development of risk management as organizational culture.

3 Attendees (4 times/Year)

Corporate Governance Committee

Roles and Responsibilities of the Risk Management Steering Committee

4 Attendees (3 times/Year)

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT SHAREHOLDING AND MANAGEMENT STRUCTURE

15 Attendees (8 times/Year)

088


090

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT SHAREHOLDING AND MANAGEMENT STRUCTURE

Company Secretary

Related Party Transactions or Acquisition or Disposal of Assets of the Company

The Company has assigned a person who holds the department manager of the Corporate Management Office to perform the duties as the Company Secretary as per the resolution of the Board of Directors Meeting on July 11, 2008. Presently is Mr. Viroj Meenaphant.

Director and Executive Remuneration Director Remuneration

In order to comply with the principles of good corporate governance in terms of the responsibility of the Board of Directors and the Securities and Exchange Act, the Company appointed the company secretary. The company secretary is responsible for providing advices the Board of Directors and executives regarding the applicable laws and regulations that the Board of Directors must recognize and act upon, the corporate governance policies as well as the arrangement of the Board of Directors meetings and the AGM. The company secretary must also monitor and coordinate to ensure that the Board of Directors and shareholders’ resolutions are fully complied. The Company secretary is also assigned to keep Company’s important documents as required by the laws.

Brief Biography: Name Mr. Viroj Meenaphant Education Bachelor Degree of Engineering (Chemical Engineering), Chulalongkorn University Experience: 2001-2003 General Manager, Corporate Affairs; Thai Lube Base Public Co., Ltd. 2003-2004 General Manager, Finance; Thai Lube Base Public Co., Ltd. 2005-2006 Assistant Manager of Business Development and Strategic Planning Department 2006-2007 Manager of Strategic Planning Department 2007-April 2009 Manager-Special Project and assigned to perform as the Managing Director of Thaioil Marine Co., Ltd. Present Manager of the Corporate Management Office and Company Secretary

The Management

Roles and Responsibilities of the Chief Executive Officer The Chief Executive Officer is assigned by the Board of Directors to manage the normal business and affairs of the Company according to the plans and budgets approved by the Board of Directors with due consideration to discipline, honesty, integrity and the best interests of the Company and the shareholders. He shall be scrupulous in avoiding conflicts of interest with Thaioil and Thaioil subsidiaries. His roles and responsibilities are: 1. To develop and propose a five - year/ten-year business plan and strategies for conducting business to

the Board of Directors. 2. To provide the Board of Directors with information on Company activities or other required information. 3. To manage the business and affairs of the Company consistent with business plans and strategies approved by the Board of Directors. 4. To effectively structure and manage the organization according to guidelines given by the Board of Directors. 5. To foster POSITIVE into the corporate culture to support the corporate vision, mission and strategies. 6. To perform other duties as assigned by the Board of Directors. 7. To have the authority to delegate and/or assign other persons to perform specific tasks within the framework of rules, regulations or orders established by the Board of Directors and/or the Company. 8. To prepare and present reports on the performance of the Company to the Board of Directors regularly including reports on other matters as required

091

In the event Thaioil or Thaioil subsidiaries (companies in which Thaioil directly or indirectly has a shareholding of more than 50 percent of the registered paid-up capital of such companies) becomes involved in a related party transaction or an activity in which substantial assets of the Company are acquired or disposed, according to the principles of SET, the Company must take the action stipulated by SET. This requires approval to be sought from shareholders to enter a related party transaction or to acquire or dispose of substantial assets of the Company with a majority vote not being less than three-fourths (3 /4) of all the votes of shareholders or proxies attending the meeting and eligible to vote without counting the votes of shareholders involved in the conflict of interest.

The 2009 annual general meeting set the monthly remuneration for the Company’s directors and sub-committees including a special bonus in reflecting to the Company’s performance as follows: Remuneration Structure

Year 2009

Individual Remuneration Chairman of the Board (1) Member of the Board Special Bonus for the Board of Directors(2)

Baht/Month 75,000 60,000 25 million baht/year

Sub-Committee Remuneration

(Comprised of the Audit Committee, the Nomination and Remuneration Committee, and the Corporate Governance Committee) Remuneration Structure

Year 2009

Individual Remuneration Chairman of the Committee (1) Member of the Committee

Baht/Month 31,250 25,000

Remark: (1) Chairman of the Board and Chairman of the Committee shall receive a monthly remuneration of 25% higher than directors. (2) Special bonus for directors who take position in 2009 and members who completed or resigned during 2009 by allocating the period of holding the position of individual Board Members

In summary, the remuneration of 19 directors, which includes directors in office during 2009 for a period of 12 months ending as of December 31, 2009 and directors who completed their terms or resigned during 2009, totals 14.50 million baht. This comprised monthly remuneration for the Company’s directors of 10.99 million baht and monthly remuneration for Sub-committee members of 3.51 million baht. Directors’ remuneration in the form of a special bonus for 2008 performance totalled to 25 million baht, which is according to the resolution of the 2009 AGM on April 3, 2009. Consideration was given to the successful performance of the Company and the sacrifice and commitment of directors to the Company throughout 2008, which was affected by the global economic crisis and high-volatility of oil prices. The details of the remuneration received by each director are summarized and presented as follows:


Position

96,875 1,015,625

96,875 77,500 1,222,359

1,275,000

375,000 300,000 300,000 300,000

- - - - 14,498,984

282,875 263,500 282,875 540,000

900,000 783,984 1,020,000 1,020,000 736,000 1,038,750 1,020,000 1,020,000 1,095,000 1,020,000 1,020,000 1,020,000 720,000 536,000 180,000

440,239.79 440,239.79 440,239.79 843,012.36 25,000,000

1,709,441.74 1,709,441.74 1,709,441.74 1,709,441.74

1,592,356.69 1,606,406.89 1,273,885.35 1,273,885.35 1,273,885.35 1,709,441.74 1,709,441.74 1,709,441.74 430,872.99 1,709,441.74 1,709,441.74

Notes: (1) Special bonus for 2008 company performance as the resolution of the 2009 Annual General Meeting of Shareholders (AGM) on April 3, 2009 which was paid in April 2009 (2) Appointed as director at the 2009 AGM on April 3, 2009 and was appointed as a member of the Audit Committee (AC) at the BOD meeting no. 2/2009 on April 29,2009 and was later appointed as the Chairman of the Audit Committee at the AC meeting no. 2/2009 on May 11, 2009 (3) Appointed as director at the 2009 AGM on April 3, 2009 and was appointed as the Audit Committee at the BOD meeting no. 2/ 2009 on April 29, 2009 (4) Appointed as the Chaiman of the Nomination and Remineration Committee (NRC) at the NRC meeting no. 3/ 2009 on September 25, 2009 (5) Appointed as director at the 2009 AGM on April 3, 2009 (6) Appointed as director and Chief Executive Officer at the BOD meeting no. 6/ 2009 on September 25, 2009, effective from October 1, 2009 (7) Completed his term as director at the 2009 AGM on April 3, 2009 (8) Retired on September 30, 2009 (9) Completed his term as director at the 2008 AGM on April 4, 2008 (10) Resigned from the director and member of the Corporate Governace Committee on October 1, 2008

318,750 300,000 300,000

247,984 300,000 300,000 200,000

(Baht) 2009 Directors Remuneration Sub - Committees Nomination and Corporate Special Bonus (1) Remuneration Governance Board of Audit Total for 2008 Directors Committee Committee Committee Remuneration Performance

1 Mr. Somnuk Kyavatanakij Independent Director/Chairman of the Board of Directors 900,000 Independent Director/Chairman of the Audit Committee 536,000 2 Mr. Manu Leopairote (2) 3 Mr. Krairit Nilkuha Independent Director/Member of the Audit Committee 720,000 4 Mr. Chaikasem Nitisiri Independent Director/Member of the Audit Committee 720,000 Independent Director/Member of the Audit Committee 536,000 5 Mr. Utid Tamwatin (3) (4) 6 Mr. Nontigorn Kanchanachitra Independent Director/Chairman of the Nomination and Remuneration Committee 720,000 7 Miss Puongpech Sarakun Independent Director/Member of the Nomination and Remuneration Committee 720,000 8 Mr. Prasert Bunsumpun Director/Member of the Nomination and Remuneration Committee 720,000 9 Gen. Prayut Chan-o-cha Independent Director/Chairman of the Corporate Governance Committee 720,000 10 Mr. Apisak Tantivorawong Independent Director/Member of the Corporate Governance Committee 720,000 11 Mr. Banphot Hongthong Independent Director/Member of the Corporate Governance Committee 720,000 12 Mr. Prajya Phinyawat Director/Member of the Corporate Governance Committee 720,000 13 Mr. Pichai Chunhavajira Director 720,000 Director 536,000 14 Mr. Naris Chaiyasoot (5) (6) Director/Secretary to the Board and Chief Executive Officer 180,000 15 Mr. Surong Bulakul Directors who completed their term and resigned during the year 2009 186,000 1 Mr. Nibhat Bhukkanasut (7) Independent Director/Chairman of the Audit Committee 186,000 2 Mr. Nit Chatramonklasri (7) Independent Director/Member of the Audit Committee 3 Mr. Chakramon Phasukavanich (7) Independent Director/Chairman of the Nomination and Remuneration Committee 186,000 Director/Secretary to the Board 540,000 4 Mr. Viroj Mavichak (8) Directors who completed their term and resigned during the year 2008 (received a special bonus for 2008 performance) Independent Director/Chairman of the Board of Directors 1 Mr. Cherdpong Siriwit (9) Independent Director/Chairman of the Audit Committee 2 Mr. Manu Leopairote (9) (9) Independent Director/Chairman of the Nomination and Remuneration Committee 3 Mr. Pala Sookawesh 4 Mr. Surapon Nitikraipot (10) Independent Director/Member of the Corporate Governance Committee TOTAL 10,986,000

No. Name - Surname

Summary of Remuneration for the Board of Directors: 092 THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT SHAREHOLDING AND MANAGEMENT STRUCTURE

Other Remuneration

093

Executive Remuneration

As of the fiscal year ended on December 31, 2009, the remuneration of 27 executives totalled to 135.15 million baht. This comprises remuneration in the forms of monthly salaries and allowances of 93.23 million baht, special bonus of 21.13 million baht, provident fund contributions of 10.09 million baht, and retirement gratuity fund payments of 10.70 million baht. Remark: The Remuneration for 27 executives as of December 31, 2009 - Including Mr. Nitas Krongvanitchayakul January-April 2009 Mr. Sukrit Surabotsopon January 2009 Mr. Viroj Meenaphant May-December 2009 Ms. Sadudee Suriyakham January 2009 Mr. Chaiwat Damrongmongkolgul September-December 2009 Ms. Bhawana Suphavilai January 2009 Mr. Feiko William Snuif January-April 2009 Mr. Viroj Mavichak January-September 2009 Mr. Surong Bulakul October-December 2009 - Excluding The executives who work in the subsidiary companies are as follows: Mr. Pramin Phantawesak Mr. Bowon Vongsinudom Mr. Klahan Tochamnanvit Mr. Suphon Tubtimcharoon Mr. Abhinant Supatrabutra Mr. Mitri Reodacha

Executives who were provident fund members received contributions at the rate of 15% of salaries according to regulations of the provident fund which is the general practice of the Company.


094

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT RISK MANAGEMENT

095

Risk Management Background

Thaioil has been fully aware of how the risk management is crucial to its operations in achieving the set targets amid a volatile environment with direct and indirect impact on profitability. Thaioil has, therefore, established a common risk management policy and structure covering the whole group of companies. The Risk Management Steering Committee (RMSC) is responsible for providing necessary support to risk management activities including monitoring progress. RMSC approves risk exposures and relevant control measures as proposed by Risk Management Committees - Disciplines by determining whether mitigation measures provide effective coverage and are appropriate and adequate according to the risk policy. Progress of risk management activities are reported to the Audit Committee every quarter and to the Board of Directors at least twice a year. The Internal Systems Audit Section is accountable to monitor and audit progress of risk management implemented by various departments. A qualified third-party assessor is engaged to assess the quality of Thaioil Group risk management. The assessment covers the efficiency and effectiveness of risk management processes according to international standards. The findings had demonstrated continually improving risk management capabilities. A score of 73% was rated in 2007, 87% in 2008, and 87% (expanded assessment scope to cover TOP Group) in 2009. Through continuous efforts, Thaioil has been able to manage risk exposures to within acceptable limits as well as prevent the negative impact of new potential risks. These risk factors can be summarized as follows.

Strategic Risk 1. Global Crisis and Industry Downturn

The financial crisis in the US in September 2008, which expanded into a global economic recession from the end of 2008 to 2009, severely affected the demand for industrial goods including vehicle fuels which are Thaioil’s major products. Thaioil responded to the potential impact on Group’s consolidated profits by developing marketing, production and alternative business plans. Thaioil also placed emphasis on Group-wide collaboration by forming operational plans and putting into practice the results of operational excellence workshop. In support of these efforts were a number of strategic programs and measures. For instance, identifying new markets such as Indochina, launching new products to market ahead of other refineries such as EURO IV-grade gasoline and low-toxic rubber oil TDAE, operating cost reduction measures, profit improvement from Hydrocarbon Management Review (HMR) programs, optimizing synergy among domestic refineries and the PTT Group via the cooperation under Oil Integration

Management (OIM) project etc. In addition, Thaioil implemented investment strategy constantly aiming at increasing business value added and diversifying risks by identifying new investment opportunities with low risks and acceptable returns.

2. Changes and New Government Policies, Laws and Regulations

The production and commercial activities as well as investment programs of Thaioil and subsidiary companies are affected by government policies and laws, such as those governing alternative fuels, prices and quality control, as well as the environment. To mitigate the impact of government policy, Thaioil and subsidiary companies incorporated with refineries under the PTT Group, have been coordinating closely and preparing information for government authorities to review and take into consideration. Thaioil has also formulated plans in response to a variety of impact, such as providing data to support the review of new legislation and developing employee knowledge and skills to facilitate their adjustment to change. Thaioil also coordinates with other domestic refineries to jointly develop plan in response to potential risks.

3. Strategic Execution

Putting strategies into practice can expose Thaioil to many obstacles and risks that hinder its targeted success. The Company’s Growth Steering Committee meets regularly to monitor progress in studying and developing new businesses and to review the adequacy of financial and human resources. To enhance the efficiency in monitoring project progress, leader is assigned for every project with the Business Development Department as the focal point for coordinating with those responsible for the projects and the Strategic Planning Department. In addition, Thaioil has put in place an effective system for monitoring and reporting performance against corporate and department targets on a monthly basis. The Risk Management Section is responsible to monitor and review with risk owners in every business unit in order to improve the effectiveness and confidence in implementing plans and mitigating measures of corporate strategy.

4. Merger and Acquisition Risk: Pre and Post Transaction

Thaioil’s strategy is aiming for expansion into new businesses to diversify investment and enhance profits. Implementing this strategy, however, could expose the Company to the risk of returns on investment failing to meet the target, which will impact on overall business growth. Thaioil has mitigated associated risks through human resources management. Personnel with merger and acquisition (M&A) experience have been assigned to assume responsibility for these projects. There are central units to provide support in terms of studies, analyses and monitoring project progress. A team of financial and legal consultants with M&A experience has been formed to provide expert counsel. The Business Development Department and Thaioil Energy Solutions, a subsidiary company, have roles and responsibility in providing the acquired business with support on business and technology, financial and human resources.


096

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT RISK MANAGEMENT

Marketing Risk 1. Oil Price Fluctuate and Margin Decrease

World oil prices and market are key variables impacting Thaioil’s revenue and profitability targets. By closely and consistently monitoring movements in prices and the oil market, Thaioil can obtain adequate information that enable to forecast and plan sales precisely and hence mitigating impact on planned revenues and profits. Thaioil has also developed the capability of its Corporate Commercial Planning Department by applying tools that enable in-depth market and oil pricing analysis to support production and commercial planning. The Company has implemented proactive planning of feedstock purchase and oil hedging, an effective credit and inventory management program, Operational Excellence Workshop, the Hydrocarbon Management Review (HMR) which helps improve gross integrated margins and reduce operating costs, including new measures to reduce costs of feedstock and freight.

2. Decline in Domestic Demand

Volatility of the economy affected product demand of Thaioil’s customers. Thaioil, hence, adopted measures which focus on sales planning, market expansion, and securing new customers in neighboring regions where the Company has an advantage such as Indochina. Some of these measures include: improving customer satisfaction both domestic and abroad by expanding distribution channels such as the opening of the new lorry loading facility for service to offer customers greater convenience and flexibility; matching sales and production to market conditions at any particular period and seeking overseas markets with the potential to absorb export of petroleum, aromatics, lube base oil and solvent products; and collaborating with other refineries to manage the surplus supply.

3. Technological Changes

Changes in technology have created numerous alternatives for consumers and affected Thaioil’s operations, for instance, petroleum product consumption has reduced as replaced by other alternative energy. Thaioil has new product development project and plans to have TLB produce Group II lube base oil in place of Group I to meet changing customer requirements; closely monitor changes in technology which affect oil consumption and market demand; set strategy to address these changes; and cooperate with PTIT, PTT’s Wang Noi Research Center and leading universities on research and development of new products.

4. Feedstock Interruption

Oil-exporting countries tried to control output during the economic downturn to keep the price of crude oil from excessive falling down. There is also an increase in crude oil demand as new regional refineries came on stream. Thus, it became harder for Thaioil to secure feedstock, particularly Middle East crude which is well suited to the design of Thaioil and subsidiaries process. Any interruption to feedstock supply can cause the refinery to shut down and the inability to fulfill contractual obligations in delivering products to customers. This, as a consequence will create a loss of revenue and loss of reputation for Thaioil. Thaioil has, therefore, adjusted the refining operations to process crude oil available in the market. Crude supply planning is undertaken in collaboration with PTT and includes securing long-term contracts in volumes that meet the requirements of the production plan.

097

Operations Risk 1. Single-Site Operation and Operational Disruption

The benefit of Thaioil refinery and its subsidiary plants being located on the same site is the cost advantage in product delivery between the refinery and plants, equipment maintenance, and oil loss control. However, this could turn into a weakness in the event of unexpected incidents such as being the target for instigating political turmoil, protest demonstration or sabotage. Any of these events could force all our operations to shut down, losing business opportunities and revenues. Thaioil, therefore, manages this risk by establishing stringent security and safety measures; cooperating with government agencies that provide national security intelligence; practicing our emergency plan; installing additional safety systems such as the overfill protection for storage tanks; constructing and putting into operation the firehouse; providing additional firefighting foam throughout the site; installing various alarm systems; and having in place a disaster recovery plan which covers procurement, sales, finance, insurance, and information technology systems for process units. Additional efforts include the implementation of preventive maintenance whereby equipment are inspected and repaired to prevent failure, the installation of additional safeguarding systems, cooperating with government units in annual emergency drills and extending insurance coverage to Business Interruption.

Corporate Risk 1. Human Resource Capability

Our Human Resources and Organization Development Business Improvement Departments are responsible for organization development, macro structure, and knowledge management. In terms of human resources development, Thaioil has launched the campaign to promote the POSITIVE corporate values, implements the development of employee competence through individual career and individual development plans, succession plans, performance management, experienced personnel recruitment, and job rotation of Thaioil Group employees in order to develop their competence and reinforce Thaioil’s potential for sustainable growth.

2. Community and Public Pressure

Business operations, especially large corporations, must make community and environmental safeguarding a priority. Thaioil recognizes that protecting the environment from the impact of its operations is vital as it could otherwise lead to claims and charges being filed that would discredit the good name of Thaioil and result in business being ordered to shut down. Thaioil has, therefore, adopted a proactive policy which aims to foster good relations equally with every community group, to build trust through transparent disclosure of information on production and the community, and setting up a community education center to develop relations and to communicate with the community. However, should it become unavoidable or in the event of an emergency, Thaioil will apply crisis communication management in ending the root cause and provide correct and timely facts in order to prevent rumors or a negative image of the Company.


098

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT RISK MANAGEMENT

Financial Risk 1. Fluctuation in Foreign Exchange Rate   

Thaioil capability in sourcing outside fund is subject to many factors including: •  Operational results, financial position and cash flows of Thaioil and subsidiary companies •  Economic situation of Thailand and the world •  Situation of petroleum and petrochemical industry in Thailand and the region •  Demand for raising capital from domestic and international money and capital markets •  Cost of debt The operations of Thaioil and subsidiary companies, which target the creation of sustainable long-term growth, and its standing as an organization with good corporate governance practices, have resulted in continuous solid operating results. Together with its close monitoring of changes in factors relevant to capital-raising, Thaioil is confident that it can secure sufficient financing to expand business in the future with appropriate financial cost.

Changes of the foreign exchange rate of the baht against the US dollar directly and indirectly affect the results and financial position of Thaioil. This is because the majority of revenues derive from domestic sales of finished oil products are based on world market prices quoted in US dollars. Therefore, changes in the foreign exchange rates affect the Company revenues. At the same time, the majority of cost of sales from crude purchase is also denominated in US dollars. This baht volatility thus affects refining margins. In addition, part of Thaioil outstanding liabilities are denominated in US dollars and the volatile baht currency affects net profits in the translation of such outstanding liabilities denominated in US dollars into baht. In order to mitigate the long-term impact on the baht, the Company has structured a portion of its borrowings and loans to be denominated in US dollars as a natural hedge to match its capability in servicing the loans affected by the foreign currency translation. To minimize the impact on operations, Thaioil has set up foreign currency deposit accounts and forward contracts to process business transactions and interest payments as well as the principal amounts consistent with our risk management approach.

2. Fluctuation in Interest Rate

The Company is exposed to the risk of interest rate volatility on short and long-term loans which have floating interest rates. US dollar-denominated borrowings are based on LIBOR or SIBOR and baht loans are based on fixed deposit interest rates or MLR or THBFIX floating interest rates of banks or average rates, whichever is specified in the loan agreement. The Company believes that there is a link between the US dollar interest rate and refining margins. Generally, when the economy of the US is strong, oil demand surges and refining margins and interest rates rise. Therefore, fixed rate loans during a period of fluctuating refining margins can expose the Company to higher interest rate risk. However, the impact of interest rate volatility may be reduced by hedging. Under interest rate hedging agreements with financial institutions, the Company and lenders agree to payment of interest and/or the principal amounts according to agreed terms.

3. Long-Term Financial Leverage

Thaioil and subsidiary companies plan to expand operations in future under several projects to sustain growth and add value to the overall business as well as enhance competitive capability in various areas to secure more business opportunities. In practice, despite Thaioil and subsidiary companies closely monitoring and managing business risks, these investments may deviate from plans due to factors outside control, such as the unpredictable domestic and global downturn, changes in the demand and supply of energy, petroleum products and petrochemicals, and sourcing of outside financing. Any of these factors can affect success and project cost.

099


100

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE GOVERNANCE POLICY

101

Corporate Governance Policy Thaioil adheres to the principles of good Corporate Governance (CG) as guided by the Stock Exchange of Thailand (SET) and the Securities and Exchange Commission (SEC) and also consistently strives on raising its CG practice to international standards. The Board of Directors, management, and all employees of Thaioil Group always recognize the essential of CG principles and practices compliance. In 2009, the Company obtained the evaluation scores of 94 or equivalent to “excellent” rating, according to the Corporate Governance Report of Thai Listed Companies 2009, which was jointly conducted by Thai Institute of Directors (IOD), SEC and SET. The score received is the highest among the SET 50 group of companies. The Company was also assessed for its arrangement of the 2009 Annual General Meeting of Shareholders. The assessment was carried out by the SEC and the Thai Investors Association (TIA). With the full score of 100 points and a 4-star bonus out of 5-star obtained, the Company has been rated as an “excellent level and deserved to be a role model.” Thaioil is aiming to become a leading fully integrated refining and petrochemical company with good CG and excellent management. To achieve the target, the Company is focusing on the best interests of shareholders and all groups of stakeholders with ethics, transparency, and withstood scrutiny. The Company sets the CG policy in order for the Board of Directors, management, and employees to perform their duties through the following guidelines. 1. Accountability - Responsibility for one’s own decisions and action, and ensuring that those actions can be

explained and clarified. 2. Responsibility - Be responsible for the duties with the best of one’s ability and efficiently. 3. Equitable Treatment - The fair and equitable treatment of all stakeholders. 4. Transparency - Corporate operation that can be examined while necessary and transparent information is

disclosed to the relevant parties. 5. Vision to Create Long-Term Value - Looking toward the future to create corporate added value. 6. Ethics - Committed to ethics and code of conduct in performing the company business by setting up the

management structure that support equitable and fair relationship among the Board of Directors,

management, and shareholders. The Company has established written corporate governance policies and guidelines and incorporated in the Corporate Governance Manual (CG Manual) and in the Corporate Governance Committee Charter (CG Board Charter). The Corporate Governance Committee is responsible for supporting the Board of Directors in drafting CG policies and principles. The first revision was issued in 2001, which was consistently reviewed. Presently, the current CG manual is the 2nd revision. The Company planned to issue the new CG manual in the middle of 2010. The Company requires directors, management, and all employees to sign upon receiving the CG manual to ensure the acknowledgment and hence adapt to practices. Shareholders and investors can download the CG manual from the Company’s website (http://www.thaioil.co.th). Thaioil also launched a medium for new employees to learn the Company’s principles of CG via electronics

(CG E-Learning) during the orientation program. This program allows new incumbent person to learn CG policies by themselves through the Company’s Intranet. After completion of this program, they will receive a certificate of completion. On the activities in promoting CG, Thaioil organized activities in disseminating knowledge on CG within

the company and participated in PTT Group CG Day every year. This event aims to encourage employees to adopt the CG principles as guidelines in performing task. As a result, this will create corporate culture and help support the Company to sustainable growth. Every Thaioil staff always realizes that the application of CG will be deeply embedded through the corporate value POSITIVE. The “I” stands for “Integrity”, which characterized by honesty, reliability, and fairness as well as devoted to a strict moral and ethical code. The Company incorporates CG as one of the corporate mission, which emphasized on the development with equitable treatment to all stakeholders. The Company aims to become the “Top CG Rating Company” in conjunction with sustainable growth and environmental concerns.

Compliance with the Company’s Corporate Governance in 2009 Article 1: Right of Shareholders

The Company recognizes and respects the right of shareholders. Thus, issued policies to protect shareholders’ rights by encouraging shareholders to exercise rights and prohibit any violation of shareholders’ right as follows: 1. Annual General Meeting of Shareholders (AGM) • Arrange the Annual General Meeting of Shareholders (AGM) every year within 4 months after the end of each fiscal year. If there is an urgent need to consider any special matter that may or in connection with the interests of shareholders, which need shareholders’ approval, the Board of Directors can call an extraordinary meeting of shareholders on case by case. 2. The Issue of Invitation Notice to the Shareholders in Advance • Send invitation notice, meeting agenda with the opinion of the Board of Directors along with proxy forms, comprised of form A, B, and C (for foreign shareholders that have appointed custodians in Thailand) in accordance with the Ministry of Commerce together with other supporting information. The Company shall publish these items on the Company’s website prior to the delivery of the meeting notice at least 30 days in advance of the AGM. • Prepare notice of the AGM which clearly specifies meeting venue, date, time, agenda, and matters to be proposed to the meeting together with appropriate detail. The opinion of the Board of Directors, minutes

of the previous meeting, annual report, all proxy forms and other relevant documents shall also be provided and distributed to shareholders not less than 14 days prior to the meeting, in accordance with the SEC. This is to ensure that the information related to voting decision received by the shareholders is sufficient, accurate, complete and transparent. The information must also be announced in the newspaper both Thai and English for 3 consecutive days and at least 3 days prior to the AGM for the shareholders to prepare themselves in joining the meeting. • In the event of an emergency to protect the rights and benefits of the Company, notice shall be delivered not less than seven (7) days in advance. Information on agenda items shall be made available at the corporate website prior to being delivered to shareholders.


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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE GOVERNANCE POLICY

3. To Facilitate the Shareholders • To facilitate all the shareholders at the meeting date. Adequate number of officers shall be assigned to welcome and check registration documents. The Company will make registration process available 2 hours prior to the meeting, by using barcode system to shorten the registration process. In addition, the Company also set up an emergency plan to increase confidence and security to all shareholders during the meeting. 4. The Shareholders’ Meeting • Before the meeting, Chairman of the Board will clarify rules and criteria in relation to the meeting, such as the opening of the meetings, voting procedures, and counting of shareholders’ vote for each session, in accordance to the Company’s Article of Association. • The Company shall provide opportunities for the shareholders to exercise their rights in protecting their own interests by asking questions, expressing opinions, and making recommendations at the AGM. The shareholders also have rights to participate in the decision of important issues, which may affect the Company, for instance, the appointment or removal of directors, the selection of nominees to become independent directors, the approval of auditors for dividend payment, the reduction or addition of capital funds, set or revises rules and regulations and the approval of memorandum items, etc. 5. Practical Guidance on Reporting Conflicts of Interest • The Company has specified director’s interest in the invitation letter and in the AGM of Shareholders. If any directors have particular interest or involved in any agenda, Chairman of the meeting must notify the participants prior to the meeting. The directors involved in the interests must not participate in the meeting and must not abstain on such matter. 6. The Operation After the Annual General Meeting of Shareholders • The Company must prepare the minutes of the shareholder’s meeting and shall notify the SEC within 14 days after the meeting, in accordance to the SEC regulations, and disseminate full details of the meeting. This includes a complete and appropriate records of the meeting, voting and questioning process of the shareholders in each session, along with the allocation of video recordings of the AGM for their acknowledgment in the Company’s website at “http://www.thaioil.co.th”

• Opportunity is provided for shareholders to assign proxies who can be Company’s independent directors or other person to attend the AGM and vote on their behalf in case the shareholders are not able to attend the meeting. A list of all independents directors with correspond information and list of interests as well as conditions to assign proxies are shown in the meeting notice in full details. • The AGM shall be conducted according to the agenda notified in the notice and it is our policy not to add items to the agenda without advance notice to shareholders. • Adequate time shall be allocated for the meeting and equal opportunities provided for shareholders to express their opinions, ask questions and exercise the rights to elect individual directors. Shareholders vote on every item using the polling card distributed at the meeting. • Directors and executives involved in matters on the agenda shall attend the AGM to answer the questions raised by shareholders. The main questions, answers and opinions shall be recorded in the minutes of the meeting for future review by shareholders. • Opportunity shall be provided to shareholders to register using the barcode system two hours prior to the meeting. After this registration period has lapsed, shareholders who wish to attend the meeting can register to attend without losing their rights. • Minutes the meeting shall be recorded correctly and completely by the Company Secretary. After the minutes are submitted to SET and SEC, they shall be published on the Company’s website within 14 days of the AGM. • Current information shall be published at the Company’s website to inform shareholders of major Company’s data and information which have changed, including information sheets disclosed in accordance with various regulations. After disclosure to SET, the information shall be published at the Company’s website in Thai and English. • The Company has in place measures to protect the use of inside information as set out in Article 4-Disclosure and Transparency.

Article 2: Equitable Treatment of Shareholders

The Company gives equal importance to all shareholders who are treated equitably and fairly to promote investors’ confidence. • Provide the opportunity for shareholders to exercise the rights to propose agenda items and qualified nominees for election as directors in advance during the period specified by the Company (at least 90 days). The criteria for exercising such rights shall be notified in detail and published on the corporate website.

Article 3: Role of Stakeholders

103

The Company extends care and consideration to every group of stakeholders and respect their legal rights or mutual agreement with the Company. Guidelines for the treatment of each group of stakeholders are clearly defined in CG manual for employees at every level to follow in discharging the important duty of interfacing with stakeholders. 1. Equitable Treatment of Major Stakeholders • Shareholders The Company, as a representative of the shareholders, is committed to conducting business with transparency, to put in place reliable financial and accounting systems, and to deliver optimum shareholder satisfaction. To achieve this, we shall take into account the long-term growth of the Company and reasonable sustained returns. The executive board and all employees shall discharge their duties truthfully and honestly, manage the Company’s business to the best of their capabilities and exercise due care. They shall refrain from any activities that could cause conflicts of interest and serve self-interest. Confidential information shall not be divulged to outside parties.


104

• Customers Customer satisfactions shall be achieved by delivering quality products which meet their requirements, disclosing complete and accurate product details, and providing communication channels for customers to lodge product complaints. Commercial terms which are unfair to customers shall not be imposed, all obligations to customers shall be fulfilled, and customer confidentiality shall be strictly upheld. • Partners, Business Competitors and Creditors Equity and honesty in conducting business, and the mutual interests of both parties shall be taken into account. This shall be achieved through strict compliance with legal requirements and other applicable rules, and adhering to business ethics. The Company practices fair competition guided by the following approaches: - Partners: No business benefits shall be dishonestly demanded or accepted from or disbursed to partners. All conditions agreed with partners shall be strictly observed. In the event any condition cannot be met, partners shall be informed in advance to mutually consider rational corrective actions. - Business Competitors: Exercise fair treatment according rules of competition and do not falsely disparage the reputation of business competitors. - Creditors: Strictly comply with conditions agreed with creditors. Truthfully report the Company’s financial position to creditors and notify them in advance if any obligation under the agreement cannot be met to mutually consider corrective actions. • Employees Cultivate and develop a good working culture and environment, promoting teamwork to bolster employee confidence of career security in working for the Company. The following are guidelines to achieving this: - Offer fair compensation to employees. - Ensure safety to the lives and property of employees in the workplace. - Promote and transfer, reward and punish employees equitably and fairly on the basis of knowledge, capabilities, suitability and performance of employees. - Recognize the importance of continually developing and transferring knowledge to employees by offering opportunities to everyone. - Listen to the opinions and proposals of employees at every level equally. - Strictly comply with all laws and regulations relevant to employees. - Administer work by refraining from any unfair action which could affect the job security of employees. - Treat employees politely, as individuals, and with respect for human dignity. - Provide channel for report or complaint any ethical and illegal behavior • Community and the Environment Show consideration for the safety of society, the environment and quality of life of the public, recognize the importance of preserving natural resources to pass on to later generations, and promote energy efficiency to achieve sustainable development. This can be realized by following these guidelines:

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE GOVERNANCE POLICY

105

- Utilization of natural resources shall take into account options with the minimum damage to the societies, the environment and quality of life of the public. - Provide a system for filing grievances on the impact on the community, investigate the causes, take corrective action, and inform persons filing the grievances of action taken. - Instill earnest and dedicated responsibility for society and the environment in employees at every level. - Be a leader in promoting the effective use and conservation of the environment for the benefit of later generations. - Strictly comply and cooperate or supervise to ensure compliance with the intent of the law and regulations issued by regulating authorities. - Support community and social activities to create social, community and environmental development, as well as support of youth education and activities of social benefit. - Uphold democracy and encourage employees to vote according to the constitution. The Company has no policy in providing financial support, whether directly or indirectly, to politicians or political parties.

• Government Authorities and Associated Organizations Strictly comply with legal requirements on the environment, safety, labor, tax and accounting, as well as government announcements applicable to conducting the Company’s business. Employees at every level must study and understand laws relating to their work and never violate such laws. Supervisors shall make available relevant laws to use as reference and shall continually monitor changes. Employees shall have easy access to data. The Company shall instill in employees at every level responsibility for constant compliance with laws, rules and Company Regulations. Good relations shall also be fostered through cooperation with related government units and associated organizations in providing information for the benefit of the country and the public. 2. Notifying Measures and Protection Mechanism The Company requires that executives at all levels assume responsibility for ensuring employees under supervision acknowledge, understand and strictly with guidelines in the CG Manual. Employees who commit ethical violations shall receive disciplinary punishment. The Company has developed CG communication channels for complaints, views, recommendations, and information about possible fraud or wrongdoing filed by employees and other stakeholders as follows. Corporate Management Office Thai Oil Public Company Limited 123 Suntowers Buidling B, 16th Floor, Vibhavadi Rangsit Road,

Chomphon, Chatuchak, Bangkok 10900 The Company plans to move to new office in May 2010: 555/1 Energy Complex Building A, 11th Floor, Vibhavadi Rangsit Road, Chatuchak, Chatuchak, Bangkok 10900 cg-coordinate@thaioil.co.th +66-2299-0000 ext. 7312-5 +66-2299-0024 CG Manual at http://www.thaioil.co.th


106

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE GOVERNANCE POLICY

The Company shall investigate the matter without revealing the source to protect the reporters against any consequences.

The Company has set up the Investor Relations Section (IR) as a focal point in conducting proactive investor relations activities, according to best practices of leading international organizations, to promote effective communication channels with investors, analysts and other related parties. Opportunities are also provided for investors to raise questions and receive Company information through various channels, such as the Company road shows and seminars are participated in with domestic and international investors; quarterly presentations for analyst meetings; report on the operations of Investor Relations to the Board of Directors at least once a year; publish the results of the operation in webcast on the Company’s website; provide shareholders and institutional investors to visit and meet business executives in order to create understandings and monitoring the possibility in the business of the Company; as well as to participate in annual exhibition organized by SET in providing educate and promoting knowledge to investors in SET in the City and Money Expo. All of which facilitate prompt communication to clarify and respond to investor queries in 3 channels: 1) Direct phone line +66-2299-0124 2) E-mail: ir@thaioil.co.th 3) Investors information published at the Company’s website, http://www.thaioil.co.th

Article 4: Disclosure and Transparency

1. Report on Director and Management Remuneration and Shareholding Information of Directors’ and Executive Management’s remuneration and shareholding shall be reported in the annual registration statement (Form 56-1), annual report (Form 56-2) information and also shown in at

the Company’s website (http://www.thaioil.co.th). Directors and Management shall be responsible for reporting ownership of company’s share each time they are acquired and disposed to the Office of Securities and Exchange Commission according to Section 59 of the Securities and Exchange Act. The Company will sent a letter asking for cooperation in the refrain from buying, selling, or transferring of shares of at least 1 month in advance before the end of the accounting period in each quarter. In addition, Company’s directors and management must update the list of interests to the Company in every quarter and the information must be re-issued every year. The information will be used only within the Company in compliance with the Notification of Capital Market Supervisory Board Tor Jor 2/2552 regarding report on the interests of director, executive, and relation person. 2. Disclosure Information of the Company The Company shall disclose information on material matters regarding the Company, including financial reports, non-financial information and other information as stipulated by SET and SEC that are accurate, clear, complete, easy to understand, transparent, adequate, reliable and timely, and which have been screened according to prescribed procedures. Governance policies and structure shall also be reported in the annual registration statement (Form 56-1), annual report (Form 56-2), and at the corporate website in Thai and English to ensure equitable access by shareholders. The Company shall further report on the responsibilities of the Board of Directors for the financial statements which appear together with the report of the independent auditors in the annual report. Besides, the Company establishes the internal control policy within each department or section to prevent confidential information from being disclosed to the public prior to formal announcement. Actions and decisions must be free from the influence of personal gains of family, relatives and/or procedures of the Company. Measures have been adopted to prevent employees at every level from using inside information for personal gains or for gains of family or associated persons, and to protect non-public information and documents, such as information on business activities or future corporate plans. Employees who disclose important information and news to outsiders without approval from the Chief Executive Officer shall be subject to disciplinary action according to Company procedures and may face legal action. 3. Investor Relations Section (IR) The Company attaches great importance to investor relations which is focused on disclosure of correct, reliable and adequate Company information to investors, analysts and other related parties in a transparent and comprehensive manner.

Article 5: Board Responsibilities

107

1. Board Structure • Directors Components and Qualifications The Board of Directors has assigned the Nomination and Remuneration Committee to nominate and select directors and Chief Executive Officer in case of vacancy. Independent directors on the Board represent at least one-third of all directors and must not be less than three directors. All the directors meet the qualifications specified in the Public Company Limited Act and none possess any of the forbidden qualities therein. Presently, the Board of Directors includes 15 directors which consisted of one executive director and 14 non-executive directors. The names of the directors, and the roles and responsibilities of the Board of Directors, Chief Executive Officer, and Company Secretary are defined in Shareholding and Management Structure on page 78-83. • Directors Nomination Regarding the selection of qualified candidates for nomination as directors in replacement of those who are retired by rotation, the Company gives the opportunity to our shareholders to nominate candidates with qualifications required by Securities and Exchange laws and by the Company’s regulations to be elected as directors. Announcement has been posted on the Company’s website to invite nomination from shareholders. The Nomination and Remuneration Committee will then select qualified candidates and propose to the Board of Directors for consideration. After the Board’s agreement, the list of such candidates will be proposed to the AGM to approve the election by majority votes. The Nomination and Remuneration Committee also select qualified directors to be members of committees in replacement of the vacancy after the AGM and propose to the Board for approval.


108

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE GOVERNANCE POLICY

109

• Independent Directors Qualification Independent directors are directors independent of major shareholders or group of majority shareholders and management with adequate authority to assess financial and business information as well as other business so as to express opinions freely in performing the assigned task of protecting the interests of minority shareholders. The independent directors are responsible for preparing their independence report when appointed and disclose the information in the Company’s annual report. Independent directors must have all the qualifications required by the SET and the SEC which are: 1) Must not hold more than one percent of the total voting rights in the Company, the Company’s subsidiary or affiliated companies. 2) Must not be an executive director, contractor, employee, or advisor who receive a salary, or a person with controlling power of the Company, its subsidiaries, or affiliated companies in the past two years. 3) Must not be a person who has blood ties or by the registered under the law to directors, executives, major shareholders, or a person who have the power to control the Company, its subsidiaries, or affiliated companies. 4) Must not be a person who has business relationships with the company during the past 2 years, both in the fields of professional services, such as the auditor or a provider of professional services with a fee exceeding 2 million baht in commercial and business, e.g. no significant transactions with the company. 5) Must not be a representative of directors, shareholders, or a person associated with the major shareholders. 6) Must not possess qualification or other manners that prevent the ability to provide independent opinion. 7) Must be able to participate in decision-making operation in the form of a quorum. 8) Must not operate the same business and in competition with the Company, its subsidiaries, or affiliated companies; shall not hold more than 1% shares; or being a director who is involved in administration, contractor, or employee who receives a salary or a person with power to control the business. The Company has a policy to have independent directors meet at least twice a year to provide opportunity for the discussion or to propose guidelines in improving the quality of Thaioil’s CG practice. 2. Remuneration of Directors Policy It is the Company’s policy to set up remuneration of directors and the Chief Executive Officer at reasonable levels to motivate and at the levels comparable to industrial sectors. Remuneration is linked to the directors’ performance and responsibility as well as the Company’s performance. The Nomination and Remuneration Committee proposes the remuneration package to the Board of Directors and consequently to the shareholder meeting for approval. Details of remuneration payments to directors and management in 2009 are shown in Shareholding and Management Structure on page 92-93.

3. Board Evaluation The Board of Directors is evaluated each year. In 2009, the Board evaluation forms included 3 forms -

1) Individual Director Evaluation (Self-Evaluation), 2) Board Evaluation, and 3) Peer Evaluation. The Company also improve the new evaluation form to cover the important issue, including the policy of the Board of Directors (Board Policy), structure of the Board of Directors (Board Composition), the preparation and carry out meeting (Board Meeting), and the practice of the Board of Directors (Board Practices). These forms comprise of issues with the Board of Directors, Risk Management and Internal Control, prevention against conflict of interest, monitoring financial report, operation of the Nomination and Remuneration Committee, and the performance appraisal. The criteria for the evaluation represent the percentage in each article as follows: Over 85% = Excellent Over 75% = Very Good Over 65% = Good Over 50% = Satisfactory Under 50% = Poor Assessment for the year 2009 can be summarized as follows: Comparison of the Performance Assessment 2008 2009 + / (-) of the Board of Directors (%) (%) (%) 97 97 - FORM 1: Individual Director Evaluation (Self-Evaluation) 89 97 8 FORM 2: Board Evaluation FORM 3: Peer Evaluation The Company will randomly select and evaluate the directors as well as 97 96 (1) the evaluators. The overall result of the peer evaluation in six areas indicates an average rating of Excellent for a score of 97%. The scores as well as opinions of the directors in each category form the basis for improving the performance of the Board in the following year. The Chief Executive Officer also participates in explaining his expectations for support from the Board.


FSD 19/2005

DAP 1/2004 DCP 38/2004

DAP 49/2006 DAP 32/2005 DCP 11/2008 DCP 82/2006 DCP 21/2009

DCP 14/2002

DCP 18/2002

DCP 104/2008

DAP 26/2004

RCP 3/2001 RCP 16/2007

DCP 30/2003 DCP 8/2001 DCP 3/2000 DCP 102/2008

ACP 24/2008 ACP 22/2008

RCC 6/2008 FSD 5/2009 FSD 1/2008

DAP 2003 DCP 59/2005 RCP 19/2008

* Retired on September 30, 2009

16. Mr. Viroj Mavichak

13. Mr. Pichai Chunhavajira 14. Mr. Naris Chaiyasoot 15. Mr. Surong Bulakul

12. Mr. Prajya Phinyawat

11 Mr. Banphot Hongthong

10 Mr. Apisak Tantivorawong

9 Gen. Prayut Chan-O-Cha

8 Mr. Prasert Bunsumpun

7 Miss Puongpech Sarakun

2 3 4 5 6

Mr. Manu Leopairote Mr. Krairit Nilkuha Mr. Chaikasem Nitisiri Mr. Utid Tamwatin Mr. Nontigorn Kanchanachitra

Independent Director/Chairman of the Board of Directors Independent Director/Chairman of the Audit Committee Independent Director/Member of the Audit Committee Independent Director/Member of the Audit Committee Independent Director/Member of the Audit Committee Independent Director/Chairman of the Nomination and Remuneration Committee Independent Director/Member of the Nomination and Remuneration Committee Director/Member of the Nomination and Remuneration Committee Independent Director/Chairman of the Corporate Governance Committee Independent Director/Member of the Corporate Governance Committee Independent Director/Member of the Corporate Governance Committee Director/Member of the Corporate Governance Committee Director Director Director Secretary to the Board/ Chief Executive Officer Director Secretary to the Board/Managing Director

Position Directors

1 Mr. Somnuk Kyavatanakij

Directors Directors Audit Financial Role of Certification Accreditation Committee Statement Compensation Program Program Program for Directors Committee (DCP) (DAP) (ACP) (FSD) (RCC) Role of Chairman Program (RCP)

4. The Performance Assessment of the Chief Executive Officer The Company conducted the performance evaluation of the Chief Executive Officer at the end of each year. The Nomination and Remuneration Committee will conduct the assessment and presented to the Board of Directors for approval. Therefore, the performance assessment of the Chief Executive Officer is considered as confidential information and cannot be disclosed. The performance assessment for the Chief Executive Officer for 2009 has 3 parts, each part has different weight proportion of the assessment, totalling to 100 points as follows: Part 1 Performance Assessment of the Index Point from the Performance (Corporate KPI), set at 60 points Part 2  Assessment of Leadership Competency, set at 30 points. Part 3  Assessment of Budget and Project Management, set at 10 points. The result of the assessment will be use to determine the adjustment of salaries and will be presented to the Board of Directors for consideration and approval. 5. The Development of Directors and Executives The Company implements a continual development program for executives in preparation for internal circulation within the organization. A succession plan for the Chief Executive Officer is also in place. Each executive at the assistant managing director level undergoes an evaluation of his or her Currently Estimated Potential (CEP), KPI-based performance evaluation, and 360-degree competency assessment according to the Performance Management System (PMS). The Company enters executives at the assistant managing director level into the executive pool of PTT as part of the Group Leadership Development (GLD) program, which performs assessment of individual capabilities, readiness, strengths, and weaknesses by independent evaluators. The outcome is used to map the Individual Development Plan (IDP). In addition, the Company has adopted the mentoring program to prepare future senior executives or Chief Executive Officer. When it is time to select a successor to the Chief Executive Officer position, the Company shall put forward the name of a qualified assistant managing director or senior executives as a candidate for the Nomination and Remuneration Committee to consider. Moreover, the Company promotes and supports training on the corporate governance for directors,

sub-committee members, management members, company secretary, etc. This enables continuous improvement to work performance. In addition, the Company has prepared set of introduction documents and materials for every new directors, which is beneficial in performing their duties, along with organizing an orientation session to introduce new directors to the Company’s business, strategies, and plans.

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THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE GOVERNANCE POLICY

Thai Institute of Directors Association (IOD) Courses attended by Directors in 2009

110


112

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT INTERNAL CONTROLS

113

Internal Controls 6. Board Meeting Meetings of the Board of Directors are planned in advance and notified to the directors in order to arrange their schedules to attend the meetings. The Chairman of the Board approves matters to be included in the agenda in consultation with the Chiet Executive Officer and in response to requests by directors to incorporate other major issues in the agenda. Supporting documents are distributed to each director well before the meeting to provide sufficient time to study and reach an informed decision on each business. Company Regulations provide that the Board shall meet at least once every three months with additional meetings as necessary. In practice, the Board meets at least once every two months with 8 meetings held during 2009. Notice of the meeting is delivered to directors at least seven days prior to the meeting, except in an emergency to protect the rights or benefits of the Company. A clear agenda is set for each meeting and adequate supporting documents are distributed sufficiently in advance to allow directors to thoroughly review the details. Free and open discussions by the directors are encouraged at the meetings. Details of meetings of the Board of Directors and Board committees and attendance at each meeting in 2009 are provided in Shareholding and Managing Structure on page 89. 7. Board Committees To effectively and efficiently discharge its duties, the Board of Directors shall appoint various committees to assist in reviewing issues and making recommendations. The standing committees in 2009 were: - Audit Committee Consists of four independent directors with qualifications as required by the SET announcement in regards to the qualifications and scope of work of the audit committee. It performs audits and balances the management of various Company functions to ensure reliability and integrity while serving the best interests of all shareholders. The names and role and responsibilities of the Audit Committee are set out in Shareholding and Management Structure on page 84-86. - Corporate Governance Committee Consists of four directors (three of them are independent directors, including the Committee Chairman). The names, role and responsibilities are set out in Shareholding and Management Structure on page 87. - Nomination and Remuneration Committee Consists of three directors (two of them are independent directors, including the Committee Chairman). The names, role and responsibilities are set out in Shareholding and Management Structure on page 86-87. - Independent Directors As of the end of 2009, there were a total 10 independent directors, which represented 66.66 percent of the Board. The names and scope of power are set out in Shareholding and Management Structure on page 80-83. - Thaioil Group Risk Management Steering Committee Consists of 12 senior executives of the Company, the role and responsibilities are set out in Shareholding and Management Structure on page 87-88. - Specific Risk Management Committees Consists of department managers and personnel in related functions, the role and responsibilities are set out in Shareholding and Management Structure on page 88.

Thaioil attaches great importance to ensure that there are effective internal control systems in place. The Board

of Directors has assigned the Audit Committee, which comprises independent directors, to review the assessment of internal control systems. The aim is to have adequate and appropriate as well as efficient and effective

internal controls for resource utilization, asset management with reliable accounting and financial reporting systems, compliance with laws, rules and Company regulations. Internal controls must cover executives and employees at

all levels. Every department is required to adhere to good practices in establishing internal controls which are sufficient and suitable for all work processes in order to drive operations to achieve set goals. It is the duty and responsibility of the Internal Systems Audit Section to audit and assess the adequacy, effectiveness and efficiency of internal control systems for all major business functions of Thaioil Group. The findings shall be reported to the Audit Committee at least once every quarter. In performing their work, the internal auditors must conform to the ethical principle set out in the Internal Audit Charter and The Standards for the Professional Practice of Internal Auditing, as well as abide by the criteria for determining adequacy of internal controls according to the international standard defined by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as follows:

1. Control Environment

The approach to internal activities is based on good corporate governance principles. Major activities in promoting the control environment are: • The organization structure was designed to better align with targets and the nature of its business, to be precise and appropriate for the management of Thaioil Group. • Assessment of employee knowledge and skills while Individual Development Plan (IDP) are established to ensure that all staff have necessary knowledge and skills and are able to perform the assigned work efficiently. • Written good corporate governance policies are established and the corporate governance manual was prepared and distributed to all employees to familiarize and apply as guidelines. Every new employee will be given an orientation on the Company’s corporate governance principles and must pass the test on corporate governance understandings through CG e-learning. • Thaioil issues comprehensible policy in promoting the POSITIVE values, which forms the foundation for developing the employee’s competence needed to enable the Company to achieve the corporate vision.

All employees of Thaioil Group support POSITIVE as the corporate values to reflect the essence and unity of Thaioil Group.

2. Risk Assessment

The Company conducts risk management for the entire Thaioil Group under the same framework, in order to support and act as a tool to prevent risk. This administrative principle is in line with the business chain management policy. The Company was able to perform according to the risk management plan, comprise of reporting the outcome to management; reviewing and monitoring the risk management outcome of every department; improving the database


114

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT INTERNAL CONTROLS

system; organizing activities which promote risk management and quality assessment of risk management of Thaioil Group. This performance has given the Company confidence in achieving the targets set for risk management. Also, risks arising from the changing environment are assessed for assurance that full assessment is undertaken for all the activities of Thaioil Group; that there are assigned responsibility; that response measures are fully in place; and

that the monitoring and review of the risk management outcome are consistently implemented. Details of

risk management are provided in Section 13: Risk Management.

Moreover, Thaioil plans to revise the Enterprise Resource Planning in 2010 from SAP 4.7 to SAP ECC 6.0.

This will improve business processes by emphasizing efficiency enhancement to support operations in accordance with the International Finance Reporting Standards (IFRS).

3. Control Activities

The Company has established the following control activities with the objective of ensuring systematic and efficient operations in order to prevent and mitigate potential risk exposure: • Established the corporate vision and mission in writing, which is understood by employees at every level and forms the basis of which work plans are formulated toward the same direction in order that every department is able to achieve the set objectives. • Established clear scope, authorization, role and responsibility for each level of management and employees in the Corporate Authorization Procedures in order to have in place appropriate internal control systems. • Established a clear division of key roles in order to mitigate the risk of error or loss. • Established policies, procedures and prepared work manual in a written form. The Internal Systems Audit Section plans the audit to cover work processes with potential critical risk due probably to inadequate and inappropriate control activities. Crucial findings from the audit are reported to the management of the business unit concerned to implement improvements and corrections. The audit findings are reported the

Audit Committee, giving the Company confidence that efficient and effective internal controls are implemented in each department. Overall, the Company has adequate, appropriate and effective control activities.

4. Information and Communication

Recognizing the importance of this internal control component, the Company has established an information system both internal and external communication channels that are efficient and effective in order to ensure complete, correct, timely and adequate communication of information for decision-making. In 2009, the Company implemented the following: • Set up the Disaster Recovery Plan (DRP) to prepare for and prevent disruption to the operation of a business unit. This consisted a listing of software programs necessary to the Company’s operations and designating the emergency work area during a disaster. In such event, all business units will be able to continue operating without disruption. • Ensured the compliance with the Computer-Related Crime Act by communicating to employees and contractors for information and awareness of proceedings and punishments. Computer traffic data was also collected in compliance with the announcement of the Ministry of Information and Communication Technology. • Given the significance of knowledge, the Company has in 2009 implemented the integration of crucial knowledge according to the Thaioil Business Activities Model (TBAM), which forms the basis of its operations,

in order to achieve sustainable growth and as the future innovation.

115

5. Monitoring and Evaluation

The Company evaluates its performance regularly using KPIs in monitoring management and work performances of employees at every level to ensure that operations are consistent with the established business plan. In addition,

the Internal Systems Audit Section is independent in executing the audit according to the annual audit plan, which is prepared according to potential business risks and cover key business processes of Thaioil and subsidiary companies. The internal auditor continually reviews the Company’s risk management performance and reports to the Audit Committee every quarter. The committee reviews the financial statement whether financial reporting discloses adequate, complete and correct information, efficiency assessment of internal control and risk management systems are appropriately executed in compliance with the law governing securities and exchange, related party transactions are disclosed in a transparent manner and can withstand scrutiny. The audit results are reported to management as well as management of relevant business units for information and to improve the effectiveness of operations.

The Internal Systems Audit Section then monitors the improvement and correction progress, and reports to the

Audit Committee.

6. Internal Control Review

The Audit Committee has reviewed the internal control system in 2009 and found no issue or anomaly. Overall,

the Committee agrees with the opinion of the external auditor that the Company has an effective and appropriate internal control system, and that the internal control system is adequate and appropriate in protecting against

or mitigating potential risks.


THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE INFORMATION

117

Corporate Information Thai Oil Public Company Limited Symbol TOP Registration Number 0107547000711 Business Operates a highly complex refinery utilizing modern and efficient processing technologies to produce petroleum products primarily for domestic distribution. Further diversifies investment into related business which includes petrochemical, lube base oil, ethanol, power generation, as well as marine and pipeline transportation of petroleum and petrochemical products. Registered Capital 20,400,278,730 Baht Comprising 2,040,027,873 fully paid-up common shares of 10 baht per share Number of Employees 872 (as at December 31, 2009) Address Bangkok Office 123 Suntowers Building B, 16th Floor, Vibhavadi Rangsit Road, Chomphon, Chatuchak, Bangkok 10900 Telephone : 0 - 2299 - 0000, 0 - 2617 - 8300 Fax : 0 - 2299 - 0024 The Company plans to move to new office in May 2010: 555/1 Energy Complex Building A, 11th Floor, Vibhavadi Rangsit Road, Chatuchak, Chatuchak, Bangkok 10900 Refinery 42/1 Moo 1, Sukhumvit Road Km 124, Tungsukla, Sriracha, Cholburi 20230 Telephone : 0 - 3840 - 8500, 0 - 3835 - 9000 Fax : 0 - 3835 - 1554, 0 - 3835 - 1444 Website http://www.thaioil.co.th Investor Relations Telephone : 0 - 2299 - 0124 E-mail : ir@thaioil.co.th


281,000,000

2,810,000,000 Common

1,771,000,000 Common

0105539103296 SPP power generation

0105539126962 IPP power generation

177,100,000

17,800,000

472043000745 Solvent and 178,000,000,000 Common petrochemical distributor VND in Vietnam or 330,000,000

(Issued Shares)

Number of Shares

1,800,000

180,000,000

Registered Type of Capital in Baht Share

Common

0105527011880 Solvent and petrochemical manufacturer and distributor

Sak Chaisidhi Company Limited 123 Suntowers Building B, 16th Floor, Vibhavadi Rangsit Road, Chomphon, Chatuchak, Bangkok 10900 Tel : 0-2299-0000, 0-2617-8300 Fax : 0-2299-0024 TOP Solvent (Vietnam) LLC. Go Dau Industrial Zones, Long Thanh District, Dong Nai Province, Vietnam Tel : +84 83827 9030-4 Fax : +84 83827 9035 Power Generation Business Thaioil Power Company Limited 123 Suntowers Building B, 16th Floor, Vibhavadi Rangsit Road, Chomphon, Chatuchak, Bangkok 10900 Tel : 0-2299-0000, 0-2617- 8300 Fax : 0-2299-0024 Independent Power (Thailand)

Company Limited 123 Suntowers Building B, 16th Floor, Vibhavadi Rangsit Road, Chomphon, Chatuchak, Bangkok 10900 Tel : 0-2299-0000, 0-2617-8300 Fax : 0-2299-0024

Business

120,000,000

0105551116491 Solvent and 1,200,000,000 Common petrochemical distributor

Registration Number

125,000,000

257,241,416

175,789,073

(Issued Shares)

Number of Shares

1,250,000,000 Common

0105551116050 Investment in solvent and petrochemical business

2,572,414,160 Common

0105539103288 Upstream petrochemical manufacturer and distributor

Registered Type of Capital in Baht Share

1,757,890,730 Common

Business

0107539000090 Lube base oil manufacturer and distributor

Registration Number

Company Name and Address

Thaioil Solvent Company Limited 123 Suntowers Building B, 16th Floor, Vibhavadi Rangsit Road, Chomphon, Chatuchak, Bangkok 10900 Tel : 0-2299-0000, 0-2617-8300 Fax : 0-2299-0024 TOP Solvent Company Limited 123 Suntowers Building B, 16th Floor, Vibhavadi Rangsit Road, Chomphon, Chatuchak, Bangkok 10900 Tel : 0-2299-0000, 0-2617-8300 Fax : 0-2299-0024

Lube Base Oil Business Thai Lube Base Public Company Limited 123 Suntowers Building B, 16th Floor, Vibhavadi Rangsit Road, Chomphon, Chatuchak, Bangkok 10900 Tel : 0-2299-0000, 0-2617-8300 Fax : 0-2299-0024 Petrochemical Business Thai Paraxylene Company Limited 105/12 Moo 2 Sukhumvit Road, Tungsukla, Sriracha, Cholburi 20230 Tel : 0-3835-1317-9, 0-3835-1878 Fax : 0-3835-1320

Company Name and Address

General Information of the Subsidiary Companies

10

10

18.5

100

(Baht/Share)

Value of Share

10

10

10

10

(Baht/Share)

24

55

Shareholding through TOP Solvent (100%)

Shareholding through TOP Solvent (80.52%)

(%)

Shareholding

Shareholding through Thaioil Solvent (100%)

100

100

100

(%)

Value of Shareholding Share

118 THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE INFORMATION

119


40,000,000

220,000,000

0105550078006 Energy consulting service

0105551121754 Investment in ethanol business

Common

Common

8,479,000,000 Common

0105534002696 Product pipeline transportation

Common

Registered Type of Capital in Baht Share

630,000,000

Business

0105541047578 Marine transportation of petroleum and petrochemical products

Registration Number

22,000,000

4,000,000

84,790,000

63,000,000

(Issued Shares)

Number of Shares

10

10

100

10

(Baht/Share)

Value of Share

Securities Registrar Thailand Securities Depository Company Limited The Stock Exchange of Thailand Building,

62 Ratchadapisek Road, Klongtoey, Bangkok 10110 Telephone : 0-2229-2888 (Call Center) Debenture Registrar and Principal Paying Agent Thai Military Bank Public Company Limited Head of Marketing & Sales Investor Services 393 Silom Road, Bangrak, Bangkok 10500 Telephone : 0-2230-6295, 0-2230-5647 Facsimile : 0-2230-6093 Auditors KPMG Phoomchai Audit Limited 22nd Floor, Empire Tower, 195 South Sathorn Road, Bangkok 10120 Telephone : 0-2677-2000 Facsimile : 0-2677-2222

Common

Common

67,500,000

15,000,000

(Issued Shares)

Number of Shares

10

10

(Baht/Share)

Value of Share

Other Services (Loss of share certificate,

change of particulars in Securities Register,

and other shareholder services) Counter Service,

1st Floor, The Stock Exchange of Thailand Building 62 Ratchadapisek Road, Klongtoey, Bangkok 10110 Telephone : 0-2229-2888 (Call Center) or Office of Registration Services Thailand Securities Depository Company Limited 2/7 Moo 7 (North Park), Vibhavadi Rangsit Road,

Thung Song Hong, Laksi, Bangkok 10210 Telephone : 0-2596-9302-10 Facsimile : 0-2832-4994-6

675,000,000

0105549129891 Ethanol production from sugarcane

Reference

150,000,000

0105549076496 IT and communication service

Registered Type of Capital in Baht Share

PTT ICT Solutions Company Limited 555 Vibhavadi Rangsit Road, Chatuchak, Chatuchak, Bangkok 10900 Tel : 0-2537-0200 Fax : 0-2537-1339 Maesod Clean Energy Company Limited 191/18-25 CTI Tower, 26th-27th Floors, Ratchadapisek Road, Klongteoy,

Klongtoey, Bangkok 10110 Tel : 0-2402-7574

Business

Registration Number

Company Name and Address

Remark * The company’s name was changed from Thaioil Energy Company Limited to “Thaioil Energy Solutions Company Limited” in accordance with approval from the Extraordinary Meeting of Shareholders no.1/2009 on December 3, 2009.

Transportation Business Thaioil Marine Company Limited 2/84 Moo 15, Old Railway Road, Bangchak, Phrakanong, Bangkok 10260 Tel : 0-2331-0080-5 Fax : 0-2331-0086 Thai Petroleum Pipeline Company Limited 2/8 Moo 11, Lumlukka Road, Ladsawai, Lumlukka, Pathumthani 12150 Tel : 0-2991-9130-59 Fax : 0-2533-2186 Other Businesses Thaioil Energy Solutions Company Limited* 123 Suntowers Building B, 16th Floor, Vibhavadi Rangsit Road, Chomphon, Chatuchak, Bangkok 10900 Tel : 0-2299-0000, 0-2617-8300 Fax : 0-2299-0024 Thaioil Ethanol Company Limited 123 Suntowers Building B, 16th Floor, Vibhavadi Rangsit Road, Chomphon, Chatuchak, Bangkok 10900 Tel : 0-2299-0000, 0-2617-8300 Fax : 0-2299-0024

Company Name and Address

Shareholding through Thaioil Ethanol (30%)

20

(%)

Shareholding

100

100

9

100

(%)

Shareholding

120 THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT CORPORATE INFORMATION

121


123

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT BUSINESS DESCRIPTION

Business Description Thaioil is Thailand’s largest refiner and supplier of petroleum products. Founded in 1961, we operate one of the most efficient refineries in Asia-Pacific with a current processing capacity of 275,000 barrels per day. To complement our core oil refining business, we engage through our subsidiary companies in related businesses of paraxylene, lube base oil, power generation, marine and pipeline transportation of oil and petrochemical products, alternative energy, and solvents. TOP Group Business Structure OIL REFINERY

PETROCHEMICAL & LUBE BASE 100%

Thaioil (TOP) Capacity: 275,000 barrels/day

Platformate 1.8 million tons/ annum

J-Power 19% PTT 26% 55%

100%

Thai Paraxylene (TPX)

Thai Lube Base (TLB)

Aromatics Capacity: Paraxylene 489,000 tons/annum Mixed Xylene 90,000 tons/annum Benzene 177,000 tons/annum Toluene 144,000 tons/annum Total 900,000 tons/annum

Lube Base Oil Capacity: Base Oil 270,000 tons/annum Bitumen 400,000 tons/annum

(TS)

Core Business

Small Power Producer (SPP) Program 3-on-1 Combined Cycle

Electricity 118 MW Steam 168 tons/hour

Solvent distribution in Thailand

100%

1st Independent Power Producer (IPP) Program 2-on-1 Gas-Fired, Combined Cycle Electricity 700 MW

Top Solvent Vietnam Solvent distribution

to Vietnam

Value Enhancement

TRANSPORTATION & OTHERS 100%

100%

Thaioil Marine (TM)

Thaioil Ethanol (TET)

Oil & Chemical Tankers Capacity: 30% 61,000 DWT 9%

Others 60% PTT 31% Mitr Phol Group 35%

Thappline (THAP) Independent Power (Thailand) (IPT)

Thaioil Solvent through TOP Solvent

Sak Chaisidhi (SAKC) Capacity: 100,000 tons/annum

Thaioil Power (TP) Sells Electricity/ Steam to Group

56% PTT 20% Thaioil 24%

100%

80.52%

POWER GENERATION

Padaeng 35%

Maesod Clean Energy (MCE)

Multi-product Pipeline Sugarcane Based Ethanol Capacity: Capacity:

26,000 million litres/year 200,000 litres/day

PTT Group 80% 20%

PTT ICT Solutions (PTTICT)

100%

Thaioil Energy Solutions (TES) Provides high quality consultant service

Earning Stability

Marketing / IT Support


124

125

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT REVENUE STRUCTURE

Revenue Structure Thaioil’s core earnings were derived from our refinery business. Other revenue contributors were the lube base oil, petrochemical, power generation, oil and petrochemicals transportation and other businesses.

Fiscal year ended December 31

D. Other Revenues(3)

Fiscal year ended December 31

A. Net Sales 1. Oil refining 2. Lube base oil 3. Petrochemicals(4) 4. Power generation 5. Oil and petrochemicals transportation 6. Other Less: Related party transactions Total B. Profit from Foreign Exchange Hedging Contracts 1. Oil refining C. Foreign Exchange Gains(2) 1. Oil refining 2. Lube base oil 3. Petrochemicals(4) 4. Power generation 5. Oil and petrochemicals transportation Total

2007 % of (1) Adjusted  Operator   Thaioil stake million baht %

2008 (1)

(5)

million baht

TOP - 253,959 TLB 100 21,582 TPX/ 100/100 33,247 Thaioil Solvent TP/IPT 55/24 12,203 TM 100 731

96 399,735 8 22,213 13 52,606

TES/TET 100/100 - (60,671)

261,051

TOP - TOP - TLB 100 TPX/ 100/100 Thaioil Solvent TP/IPT 55/24 TM 100

5 -

14,353 984

1. Oil refining 2. Lube base oil 3. Petrochemicals(4)

2009 %

million baht

99 274,325 6 16,981 13 49,365 4 -

%

95 6 17

14,231 968

5 -

- - (23) (90,766)

- 25 (23) (71,772)

- (25)

99 399,125

99 284,123

98

596 1,341 (23) 38

- - - -

- - - -

- - - -

- 1,480 3 17

- 1 - -

191 (1)

- -

- -

- -

72 3

- -

1,546

-

-

-

1,575

1

4. Power generation 5. oil and petrochemicals transportation Less: Related party transactions Total Total revenue (A - D)

2007 % of Adjusted (1) Operator   Thaioil stake million baht %

2008 (1)

(5)

TOP - TLB 100 TPX/ 100/100 Thaioil Solvent TP/IPT 55/24 TM 100

million baht

2009 %

million baht

%

4,819 179 150

2 - -

4,738 159 285

2 - -

8,136 151 329

3 - -

71 4

- -

63 16

- -

41 10

- -

(4,597)

(2)

(2,986)

(1) (6,972)

(2)

626 263,819

- 2,275 100 401,400

1 1,695 100 287,393

1 100

Remarks: (1) - The Federation of Accounting Profession announced the revised Thai Accounting Standard No. 43 in 2007 which requires the business to remove the recognized negative goodwill and adjust the opening balance of retained earnings. - As from January 1, 2008, the Company amended our accounting policy with respect to derivatives. Financial statements for 2007, presented above for comparison, have therefore been adjusted. (2) Foreign exchange net loss in 2008. (3) Comprises received interests, export tax subsidy, revenues from services provided to subsidiary companies, land lease, single buoy mooring service fee, oil tank lease, service fee for use of lorry loading, subsidy for EURO IV standard diesel fuel, etc. (4) Petrochemicals comprise paraxylene and solvent businesses. (5) TOP is Thai Oil Public Company Limited. TLB is Thai Lube Base Public Company Limited. TPX is Thai Paraxylene Company Limited. TP is Thaioil Power Company Limited. IPT is Independent Power (Thailand) Company Limited, in which the shareholding of Thaioil is 56% through Thaioil Power and 24% held directly by Thaioil. TM is Thaioil Marine Company Limited. Thaioil Solvent is Thaioil Solvent Company Limited. TES is Thaioil Energy Solutions Company Limited. TET is Thaioil Ethanol Company Limited.


126

127

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND

OPERATING RESULTS

Management’s Discussion and Analysis of Financial Position and Operating Results World oil demand declined in 2009 in the wake of the economic recession following the global financial crisis. Oil prices were severely depressed in the second half of 2008, a trend that continued until the first quarter of 2009.

By the second quarter, prices started to rebound in reflection to improved world economic figures after governments around the world injected cash to stimulate the economy. Dubai crude in 2009, therefore, averaged US$ 62 a barrel, down US$ 32 a barrel from the earlier year. When the economy began to recover, Dubai closed 2009 at US$ 75.4 a barrel, up US$ 23 a barrel from the previous year-end. Thaioil posted a gross integrated margin, excluding the oil stock impact, for 2009 of US$ 4.3 per barrel, down US$ 3.6 per barrel from 2008. This was attributable to declining global oil demand combined with additional refining capacity in the region. When oil prices rebounded in the second half of 2009, Thaioil made a stock gain of US$ 6.1 per barrel, up US$ 1.8 per barrel from the prior year. The Company also realized a consolidated net profit of 12,062 million baht attributable to the integrated management of the Group with the production chain covering aromatics, lube base and solvents and hence enhancing the reliability of profit generation.

Consoildated Results

Gross integrated margin excluding oil stock impact (1) Gross integrated margin including oil stock impact (1) Sales revenue EBITDA Net Profit (2) Earnings per share

US$/barrel ” Million baht ” ” Baht

2009

4.3 6.1 284,123 21,393 12,062 5.91

2008

Change

7.9 -3.6 4.3 +1.8 399,125 - 115,002 7,949 +13,444 224 +11,838 0.11 +5.80

Remarks: (1) The gross integrated margin including Thaioil, Thai Paraxylene and Thai Lube Base (2) Excluding the oil stock impact, net profit was 5,651 million baht for 2009 and 11,435 million baht for 2008.

In 2009, the sales revenue of Thaioil and subsidiary companies totaled 284,123 million baht, down 115,002 million baht from the prior year due to sharp falls in average oil prices. Nevertheless, the economic recovery and the good level of gross integrated margin recorded by Thaioil and subsidiary companies contributed to an EBITDA of 21,393 million baht, up 13,444 million baht from the previous year. Net profit for 2009 reached 12,062 million baht, equivalent to earnings per share of 5.91 baht, against the net profit of 224 million baht, or earnings of 0.11 baht per share,

in 2008.

Results by Company (Million baht)

TOP TPX

TLB

IPT

TP Solvent TM Others

Total for 2009

Change from 2008 +/(-)

Sales revenue 274,325 45,568 16,981 EBITDA 8,663 8,347 1,806 Financial cost (1,873) (151) - FX gain/(loss) 1,480 28 4 Income tax (1,124) - (432) 3,281 7,091 1,006 Net profit/(loss)(1)

10,507 1,353 (104) 71 (247) 570

3,730 4,572 968 560 378 242 (6) (59) (74) - (12) 3 (103) (86) (13) 240 157 26

25 5 - - - 5

284,123 21,393 (2,115) 1,575 (2,005) 12,062

%

-115,002 -29 +13,444 +169 -1 -0 +2,473 +275 +2,791 +355 +11,838 +5,285

Remark: (1) Net profit by company excludes dividends received from subsidiary companies.

The sharp drop in the average oil price lowered the sales revenue of Thaioil (TOP) in 2009 amounted 274,325 million baht, which was 125,410 million baht lowered from last year. EBITDA, however, rose to 8,663 million baht, up 7,809 million baht from the previous year. Net profit after the financial cost, foreign exchange gain and income tax, therefore, amounted to 3,281 million baht. Thai Paraxylene (TPX) recorded a fall in sales revenue of 6,878 million baht from the prior year to 45,568 million baht partly due to a lower crude oil price. Nonetheless, prices of TPX raw material which linked to unleaded gasoline (ULG) also declined. The product-to-feed margin has increased about 56%. This was attributable to the continuously rising aromatics margin following the expanding Asian economy, especially in China. These factors include the expansion project which was completed in 2008, and doubled the aromatic production, combined to increase EBITDA in 2009 by 5,094 million baht to 8,347 million baht. TPX, therefore, recorded a net profit of 7,091 million baht, against 2,014 million baht from 2008. The sales revenue of Thai Lube Base (TLB) was 16,981 million baht, down 5,233 million baht from the prior year due to the global economic crisis significantly slowing demand down in the first half of 2008, the product-to-feed margin lower to US$ 104 per ton. However, TLB succeeded in growing sales of lube base oil by 12% while bitumen price in 2007 improved significantly in 2008 as a consequence of economic stimulus package of government worldwide especially China and hence accelerate demand. The TLB’s EBITDA was 1,806 million baht falling 32 million baht from 2008. Recorded net profit was 1,006 million baht comparable to 2008. Independent Power (Thailand) (IPT) posted 10,507 million baht in sales revenue, down 172 million baht from 2008 due to poor demand. EBITDA was, therefore, down by 46 million baht to 1,353 million baht. The rise in income tax of 161 million baht from 2008 to 247 million baht is due to the exemption privilege from the Board of Investment expiring in August 2008. As a result, net profit amounted to 570 million baht similar to the previous year.


128

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND

OPERATING RESULTS

Thaioil Power (TP) reported sales revenue of 3,730 million baht, up 49 million baht compared to the previous year, due to the higher FT tariff. Lower maintenance costs account for the growth in EBITDA of 560 million baht, up 76 million baht from 2008. TP, therefore, posted a net profit of 240 million baht, up 66 million baht from the earlier period. Thaioil Marine (TM) With the addition of Thaioil 9, delivered in late 2007, and Thaioil 11, delivered in mid-2008,

TM was able to maintain the fleet utilization rate at 94%. TM, therefore, posted sales revenue of 968 million baht, a reduction of only 2% from the earlier year in spite of the economic crisis driving down tanker demand and pressuring freight rates. However, lower fuel costs account for the increase in EBITDA from 46 million baht to 242 million baht. Tanker maintenance costs increased with the scheduled dry-dock of Thaioil 10 in July 2009. Income tax rose due to the loss carried forward was fully credited in 2008. As a result, TM reported a net profit of 26 million baht, down 22 million baht from 2008. On November 2, 2009, TOP Solvent (TS), in which shares are held by Thaioil Solvent, formed TOP Solvent Vietnam to acquire the solvent business in Vietnam from Shell Vietnam Limited. The move constituted part of the business expansion plan and the enhancement of the refinery and petrochemical plant management in order to add greater value to products. It was also in alignment with the strategy to expand retail business to overseas. In 2009,

the solvent production and distribution business group of Thaioil Solvent had the capacity utilization rate of 77%. Revenue from solvent sales was 4,572 million baht, EBITDA was 378 million, and net profit, including operating and financial costs, was 157 million baht.

Analysis of Consolidated Financial Position Million baht

Total assets Total liabilities Shareholders’ equity-net

Dec 31, 2009

Dec 31, 2008

+/-

137,745 66,058 71,687

132,841 69,261 63,580

+4,904 -3,203 +8,107

Total Assets As at December 31, 2009, the total assets of Thaioil and subsidiary companies totaled 137,745 million baht, up 4,904 million baht from December 31, 2008 due mainly to current assets increased while property, plant and equipment decreased as a result of annual depreciation. Total Liabilities As at December 31, 2009, total liabilities of Thaioil and subsidiary companies totaled 66,058 million baht, down 3,203 million baht from December 31, 2008 due to decreased short-term loans from financial institutions of 6,652 million baht while accounts payable increased to 2,490 million baht.

129

Shareholders’ Equity - Net As at December 31, 2009, net shareholders’ equity of Thaioil and subsidiary companies totaled 71,687 million baht, up 8,107 million baht from 2008 due to operating net profits of 12,062 million baht and dividend payment of 4,334 million baht. Analysis of Cash Flow and Financial Ratios Cash at the beginning of the year for Thaioil and subsidiary companies amounted to 8,016 million baht. Net cash provided by operating activities was 15,336 million baht, with 2,466 million baht used in investing activities. These were mainly investment in the solvent distribution business in Vietnam, the lorry loading facility, new marine tanker -Thaioil 11, and short-term investment. Net cash spent on financing activities totaled 12,268 million baht. This primarily represented repayment of short-term loans from financial institutions of 6,730 million baht, repayment of long-term loans of 12,135 million baht, financial costs of 2,070 million baht, and dividend payment of 4,334 million baht. In February 2009, Thaioil issued 5-year Baht-denominated, non-subordinated debentures of Baht 12,000 million without collateral and offered for institutional investors and for the first time to retail investors. The funds were used for investments, working capital and/or loan repayments. The offer received great success and enables the Company to lower financial cost effectively. Therefore, cash at the end of the year for Thaioil and subsidiary companies amounted to Baht 8,618 million, increased by Baht 602 million.

Financial Ratio  

Current ratio Interest coverage ratio Long-term loan to total capitalization Long-term loan to equity Total liabilities to equity Net debt to equity

times times % times times times

2009

2008

2.7 10.1 37 0.6 0.9 0.5

1.8 3.8 40 0.7 1.1 0.7


130

131

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT RELATED PARTY TRANSACTIONS

Related Party Transactions In 2009, the Company and/or subsidiary companies had significant business transactions with subsidiary companies and persons, who were related parties that share majority shareholders and/or directors as disclosed in the Notes to the Financial Statements. Related party transactions were concluded on the basis of market prices or contractually agreed prices in the event there were no market prices available.

The relationships with various companies are as follows:

Company IRPC Plc. PTTAR Plc. Bangchak Petroleum Plc.

Company PTT Plc.

Current Relationships with Thaioil

• Major shareholder in Thaioil with 49.10 percent • Same directors: Mr. Prasert Bunsumpun, Mr. Pichai Chunhavajira, Mr. Naris Chaiyasoot and Mr. Chaikasem Nitisiri Thai Paraxyelene • 100 percent shareholding by Thaioil Co., Ltd. • Same directors: Mr. Prajya Phinyawat, Mr. Somnuk Kyavatanakij and Mr. Surong Bulakul • Thaioil executives serving as directors: Mr. Somkeirt Hudthagosol and Mr. Suphon Tubtimcharoon Thai Lube Base Plc. • 100 percent shareholding by Thaioil • Same directors: Mr. Prasert Bunsumpun, Mr. Prajya Phinyawat, Mr. Pichai Chunhavajira and Mr. Surong Bulakul • Thaioil executives serving as directors: Mr. Somkeirt Hudthagosol, Mr. Chaiwat Damrongmongkolgul, Mr. Sukrit Surabotsopon and Mr. Abhinant Supatrabutra Thaioil Power

• 26 percent shareholding by PTT Plc. Co., Ltd. • 54.99 percent shareholding by Thaioil • Same directors: Mr. Prasert Bunsumpun, Mr. Manu Leopairote and Mr. Pichai Chunhavajira • Thaioil executives serving as directors: Mr. Yuthana Pasurapunya and Mr. Mitri Reodacha TOP Solvent Co., Ltd. • 100 percent shareholding by Thaioil • Thaioil executives serving as directors: Mr. Somkeirt Hudthagosol, Mr. Chaiwat Damrongmongkolgul and Mr. Teardchart Padungrat Independent Power • 20 percent shareholding by PTT Plc. (Thailand) Co., Ltd. • 24 percent shareholding by Thaioil • 56 percent shareholding by Thaioil Power (in which Thaioil holds 54.99 percent of shares) • Same directors: Mr. Prasert Bunsumpun and Mr. Surong Bulakul • Thaioil executives serving as directors: Mr. Mitri Reodacha, Mr. Chaiwat Damrongmongkolgul and Mr. Somkeirt Hudthagosol Sak Chaisidhi

• 80.52 percent shareholding by Thaioil Co., Ltd. • Thaioil executives serving as directors: Mr. Wirat Uanarumit, Mr. Somkeirt Hudthagosol, Mr. Chaiwat Damrongmongkolgul, Mr. Teardchart Padungrat, Mr. Narongrit Tavornvisitporn and Mr. Somchai Wongwattanasan

PTT International Trading Pte. Ltd.

Current Relationships with Thaioil

• 36.68 percent shareholding by PTT Plc. • Same directors: Mr. Prasert Bunsumpun, Mr. Pichai Chunhavajira and Mr. Prajya Phinyawat • 48.65 percent shareholding by PTT Plc. • Same directors: Mr. Prasert Bunsumpun and Mr. Prajya Phinyawat • 28.46 percent shareholding by PTT Plc. • Same director: Mr. Pichai Chunhavajira • 100 percent shareholding by PTT Plc.

Related Party Transactions of Thaioil and/or Subsidiary Companies with Major

Shareholder of Thaioil Related Party Transactions between Thaioil and PTT Plc. Company PTT Plc.

Description

• Revenue from sales of oil products: Thaioil entered into a Product Offtake and Crude Supply Agreement (POCSA) with PTT Plc., whereby both Parties Agreed to trade finished petroleum products at market prices according to product planning procedures, specifications and conditions in the agreement. • Expense from purchasing oil products and natural gas: Thaioil entered into a POCSA with PTT Plc., whereby both parties agreed to trade finished petroleum products at market prices according to product planning procedures, specifications and conditions in the agreement. • Thaioil entered into agreements with PTT Plc. for the supply of natural gas by PTT Plc. for 8 years (2006-2013) and 15 years (2007-2121) for use in Thaioil refinery according to volumes in the agreements and at market prices according to normal business practice. • Thaioil entered into forward contracts with PTT Plc. periodically according to the normal course of Thaioil’s business. In 2009, the Company had net loss from crack spread swap agreements. • Sale and purchase of crude and feedstock as legal reserves.

2009

Amount in million baht

142,190

123,950

450

1,583


132

133

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT RELATED PARTY TRANSACTIONS

Related Party Transactions between Subsidiary Companies and PTT Plc. Company

Description

Thai Paraxylene

Co., Ltd.

• Revenue from sales of aromatic products to PTT Plc. • Expense from purchasing oil products, which are raw materials mixed xylenes and LPG Thai Lube Base Plc. • Revenue from sales of lube base oil to PTT Plc. Thaioil Power

• Thaioil Power entered into a natural gas supply agreement with PTT Plc. Co., Ltd. for 25 years (1998-2022) according to the volume in the agreement and at market prices according to normal business practice. Independent Power • Independent Power (Thailand) entered into a natural gas supply agreement (Thailand) Co., Ltd. with PTT Plc. for 25 years (1999-2024) according to the volume in the agreement and at market prices according to normal business practice.

1,056 656

8,371

Thaioil Power

Co., Ltd.

IRPC Plc.

Description

• Thaioil entered into an agreement with Thaioil Power for equipment operation, maintenance, repairs and other support services, and the supply of feedstock, spare parts and legal fuel reserve for 24 years starting April 1, 1998. The service fee shall be the actual cost plus overheads according to the normal business practice. • Thaioil entered into an agreement with Thaioil Power for the use of basic infrastructure systems for 24 years starting April 1, 1998. Thaioil Power shall pay a monthly utilization fee at 2 percent of the monthly revenue of Thaioil Power. • Thaioil entered into an agreement with Thaioil Power for the purchase of electricity and steam for 25 years (1998-2022) according to the agreed volume and at market prices for electricity and steam. • Revenue from intermittent sales of oil products to the IRPC Plc. as normal business. • Expense from intermittent purchases of oil products from IRPC Plc. as normal business.

Description

2009

Amount in million baht

Bangchak Petroleum • Thaioil entered into an agreement with Bangchak Petroleum to exchange Plc. long residue and fuel oil. Payment shall be offset with the cost as specified

7,462

PTT International Trading Pte. Ltd.

1,786

4,076 1,902

in the agreement. • Thaioil entered into a 15-year agreement with Bangchak Petroleum to provide buoy mooring service for receipt of crude oil cargoes. The service fee shall be according to the market price and on the same terms as offered to other parties. • Thaioil earned revenue from sale of oil products to PTT International Trading.

Related Party Transactions between Subsidiary Companies or Associated Companies

Related Party Transactions between Thaioil and Subsidiary Companies (in which Thaioil held less than 100 percent of shares) or Associated Companies Company

Company

2009

Amount in million baht

2009

Amount in million baht

Company Thaioil Power

Co., Ltd.

1,160

Thai Lube Base

Co., Ltd.

1,252

Thai Paraxylene

Co., Ltd.

Company with Related Description Party Transactions Thai Paraxylene

• Thaioil Power entered into an agreement with Co., Ltd. Thai Paraxylene for the sale of electricity and

steam for 25 years ending 2022 according to market prices. Thai Lube Base Plc. • Thaioil Power entered into an agreement with Thai Lube Base for the sale of electricity and steam for 25 years ending 2022 according to market prices. IRPC Plc. • Sale of lube base oil and by-products • Purchase of by-products IRPC Plc. • Sale of aromatic products

TOP Solvent Co., Ltd. IRPC Plc.

489 302

• Purchase of solvent products

2009

Amount in million baht

1,068 572

789 296 975 464


134

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT BOARD OF DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTING

135

Board of Directors’ Responsibility for Financial Reporting Company Sak Chaisidhi

Co., Ltd.

Company with Related Description Party Transactions IRPC Plc. • Sak Chaisidhi Co., Ltd. entered into 2

PTTAR Plc.

agreements with IRPC Plc. for the feedstock supply according to market prices for 3 years, starting April 1, 2007 and October 30, 2007. • Sak Chaisidhi Co., Ltd. entered into an agreement with PTTAR Plc. for the feedstock supply according to market prices for 5 years, starting March 1, 2005. • Sak Chaisidhi Co., Ltd. entered into an agreement with PTTAR Plc. for the feedstock supply according to market prices, starting from March 1, 2005.

2009

Amount in million baht

253

1,083

The accompanying consolidated financial statements of Thai Oil Public Company Limited and subsidiaries have been prepared in conformity with the requirements of the Public Company Act B.E. 2535 (1992), the Securities and Exchange Act B.E. 2535 (1992), the Announcement of the Department of Commercial Registration dated September 14, 2001 issued in accordance with Section 11, Paragraph 3 of the Accounting Act B.E. 2543 (2000), and the accounting standards prescribed by the Federation of Accounting Professions. The Board of Directors is responsible for the financial statements which have been prepared to provide assurance that the financial position, income, expenses and cash flows are true and fair, an effective internal control system has been established, accounting records have been properly and adequately maintained to safeguard assets and prevent fraud and other irregularities with material implications, suitable accounting policies have been selected in the preparation of the financial statements and consistently applied in accordance with generally accepted accounting standards, and key information has been adequately disclosed in the notes to the financial statements. The independent auditors have expressed their opinion on the financial statements of Thai Oil Public Company Limited and the consolidated financial statements of Thai Oil Public Company Limited and subsidiaries in the Auditors’ Report.

Somnuk Kyavatanakij Chairman of the Board Thai Oil Public Company Limited

Surong Bulaku Chief Executive Officer Thai Oil Public Company Limited


THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

137

Audit Report of Certified Public Accountant To the Shareholders of Thai Oil Public Company Limited

I have audited the accompanying consolidated and separate balance sheets as at 31 December 2009, and the related statements of income, changes in equity and cash flows for the year then ended of Thai Oil Public Company Limited and its subsidiaries, and of Thai Oil Public Company Limited respectively. The Company’s management is responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to express an opinion on these financial statements based on my audits. The consolidated and separate financial statements of Thai Oil Public Company Limited and its subsidiaries, and of Thai Oil Public Company Limited respectively for the year ended 31 December 2008 were audited by another auditor whose report dated 11 February 2009 expressed an unqualified opinion on those statements. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the consolidated and separate financial statements referred to above present fairly, in all material respects, the financial positions as at 31 December 2009 and the results of operations and cash flows for the year then ended of Thai Oil Public Company Limited and its subsidiaries, and of Thai Oil Public Company Limited respectively in accordance with generally accepted accounting principles.

(Charoen Phosamritlert) Certified Public Accountant Registration No. 4068 KPMG Phoomchai Audit Ltd. Bangkok 19 February 2010


138

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

As at 31 December 2009 and 2008

As at 31 December 2009 and 2008

Balance sheets

139

Balance sheets (in Baht)

Assets

Current assets Cash and cash equivalents Current investments Trade accounts receivable Short-term loans to related parties Inventories Prepaid corporate income tax Value added tax receivable Other current assets Total current assets

Non-current assets Investments in subsidiaries Investments in associates Other long-term investments Property, plant and equipment Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets

Note

6, 17 7, 17 5, 8 5 5, 9 5, 10 11 12 7 13, 17 14 15 16

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

8,618,114,654 8,016,204,295 5,675,290,263 3,670,608,211 619,978,540 539,101,097 - - 20,190,732,812 15,237,033,453 17,583,298,131 12,076,860,511 - - 4,007,500,000 3,159,000,000 28,936,590,245 20,544,717,417 24,546,077,830 17,770,008,984 218,313,384 4,357,671,317 213,162,875 4,354,497,954 4,667,682,904 3,844,292,329 4,296,684,955 3,439,864,661 1,220,001,142 2,060,074,377 899,707,382 1,284,220,780 64,471,413,681 54,599,094,285 57,221,721,436 45,755,061,101 - - 8,313,387,002 8,094,387,002 202,310,745 229,198,269 30,000,000 232,500,000 1,012,335,174 915,137,454 1,012,335,174 915,137,454 67,800,702,776 72,214,677,647 34,375,979,165 37,220,563,811 790,156,695 841,686,729 235,912,659 245,304,703 324,957,605 1,550,131,783 319,337,859 1,527,621,885 3,142,822,608 2,490,798,250 2,003,703,103 2,080,682,105 73,273,285,603 78,241,630,132 46,290,654,962 50,316,196,960 137,744,699,284 132,840,724,417 103,512,376,398 96,071,258,061

The accompanying notes are an integral part of these financial statements.

(in Baht)

Liabilities and equity

Current liabilities Short-term borrowings from financial institutions Trade accounts payable Short-term borrowings from

related parties Current portion of long-term borrowings from financial institutions Current portion of debentures Excise duty payable Income tax payable Other current liabilities Total current liabilities

Non-current liabilities Long-term borrowings from financial institutions Debentures Deferred tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities

Note

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

1,300,000,000 7,951,578,963 1,300,000,000 7,951,578,963 5, 18 18,108,349,029 15,618,028,657 16,992,551,665 14,305,872,938 17

-

5,17 13, 17 17 5, 19

-

3,165,670,801

-

2,144,962,498 2,168,194,363 296,350,000 - - 2,750,000,000 - 2,750,000,000 757,541,010 162,014,885 757,541,010 162,014,885 448,435,776 229,381,692 - - 1,538,362,723 1,393,983,368 1,384,294,876 1,117,933,914 24,297,651,036 30,273,181,928 23,896,408,352 26,287,400,700

13, 17 10,381,953,489 18,897,121,663

5,630,650,000 29,607,517,284 1,302,371,118 597,844,359 37,138,382,761 61,034,791,113

11,943,480,000 18,300,175,463 1,386,721,116 571,651,627 32,202,028,206 58,489,428,906

17 29,607,517,284 18,300,175,463

1,329,503,487 1,420,237,572 441,199,191 370,588,686 41,760,173,451 38,988,123,384 66,057,824,487 69,261,305,312

15

The accompanying notes are an integral part of these financial statements.


140

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

Balance sheets

141

Statements of income

As at 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008 (in Baht)

Liabilities and equity

Equity Share capital Authorised share capital Issued and paid-up share capital Additional paid-in capital Premium on ordinary shares Unrealised deficit Fair value changes on investment Currency translation differences Retained earnings Appropriated Legal reserve Other Unappropriated Total equity attributable to equity holders of the Company Minority interests Total equity Total liabilities and equity

Note

20 21 21

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

20,400,278,730 20,400,278,730 20,400,278,730 20,400,278,730 20,400,278,730 20,400,278,730 20,400,278,730 20,400,278,730 2,456,261,491 2,456,261,491 2,456,261,491 2,456,261,491 (19,604,723) (10,939,251) (19,604,723) (10,939,251) (4,575,198) - - - 2,040,027,873 2,040,027,873 2,040,027,873 2,040,027,873 244,500,000 244,500,000 244,500,000 244,500,000 41,671,653,809 33,791,872,712 17,356,121,914 12,451,700,312

66,788,541,982 58,922,001,555 42,477,585,285 37,581,829,155

4,898,332,815 4,657,417,550 - - 71,686,874,797 63,579,419,105 42,477,585,285 37,581,829,155 137,744,699,284 132,840,724,417 103,512,376,398 96,071,258,061

The accompanying notes are an integral part of these financial statements.

(in Baht)

Revenues Revenue from sale of goods and rendering of services Net foreign exchange gain Other income Total revenues

Note

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

5, 28 284,123,035,628 399,124,764,379 274,324,864,770 399,735,344,114

1,574,988,023 - 1,480,332,855 - 5, 23 1,695,248,457 2,274,942,161 8,136,589,193 4,738,438,761 287,393,272,108 401,399,706,540 283,941,786,818 404,473,782,875

Expenses

Cost of sale of goods and rendering of services Selling expenses Administrative expenses Management benefit expenses Net derivative loss on hedging Net foreign exchange loss Total expenses Share of loss of associates Profit (loss) before finance costs

and income tax expense (income) Finance costs Profit (loss) before income tax expense (income) Income tax expense (income) Profit (loss) for the year Profit (loss) for the year attributable to: Equity holders of the Company Minority interests Profit (loss) for the year Basic earnings (loss) per share (Baht)

5, 9 5 5, 24 5, 25 12

269,014,692,068 393,665,390,105 270,382,778,647 400,225,705,565 200,596,508 108,546,692 383,206,730 173,713,522 937,149,274 707,985,559 557,317,514 430,150,308 278,744,922 302,893,521 174,650,213 226,961,506 360,961,300 3,825,340,046 360,961,300 3,825,340,046 - 897,600,421 - 802,476,656 270,792,144,072 399,507,756,344 271,858,914,404 405,684,347,603 (26,887,524) (2,035,451) - -

16,574,240,512 5, 26

2,114,723,892

14,459,516,620 27 29

2,004,749,154 12,454,767,466 12,061,537,927 393,229,539 12,454,767,466 5.91

The accompanying notes are an integral part of these financial statements.

1,889,914,745 12,082,872,414 (1,210,564,728) 2,116,400,519 1,872,759,954 1,702,603,891 (226,485,774) 10,210,112,460 (2,913,168,619) (785,838,235) 1,123,934,028 (1,376,855,838) 559,352,461 9,086,178,432 (1,536,312,781) 223,570,235 9,086,178,432 (1,536,312,781) 335,782,226 - - 559,352,461 9,086,178,432 (1,536,312,781) 0.11 4.45 (0.75)


- - - 2,456,261,491

-

- - - - 20,400,278,730

30

- (19,604,723)

- -

- - - - -

20,400,278,730 2,456,261,491

30

-

-

-

(8,665,472)

-

(8,665,472)

-

(8,665,472)

-

-

(10,939,251)

223,570,235

223,570,235

-

-

-

-

-

-

607,647,299

559,352,461

59,234,089

(10,939,251)

(10,939,251)

Total equity attributable to equity holders of Unappropriated the Company

Minority interests

Total equity

(in Baht)

For the years ended 31 December 2009 and 2008

Thai Oil Public Company Limited and its Subsidiaries

4,657,417,550 63,579,419,105

(188,080,814) (9,367,751,717)

395,016,315

335,782,226

59,234,089

-

-

-

-

-

(13,240,670)

(4,575,198)

(8,665,472)

(13,240,670)

(4,575,198)

(8,665,472)

393,229,539 12,441,526,796

393,229,539 12,454,767,466

-

-

-

244,500,000 41,671,653,809 66,788,541,982 4,898,332,815 71,686,874,797

- (4,181,756,830) (4,181,756,830) (152,314,274) (4,334,071,104)

- 12,061,537,927 12,048,297,257

- 12,061,537,927 12,061,537,927

-

-

-

244,500,000 33,791,872,712 58,922,001,555 4,657,417,550 63,579,419,105

Other

Total equity

4,450,482,049 72,339,523,523

Minority interests

Statements of changes in equity

Retained earnings

(4,575,198) 2,040,027,873

-

(4,575,198)

-

(4,575,198)

(4,575,198)

-

212,630,984

223,570,235

-

(10,939,251)

(10,939,251)

244,500,000 33,791,872,712 58,922,001,555

- 2,040,027,873

Legal reserve

-

-

-

- (9,179,670,903) (9,179,670,903)

-

-

-

-

-

Consolidated financial statements

2,040,027,873

-

-

-

-

-

-

244,500,000 42,747,973,380 67,889,041,474

Other

Total equity attributable to equity holders of Unappropriated the Company

Retained earnings

2,040,027,873

Legal reserve

Currency translation differences

(10,939,251)

-

(10,939,251)

-

-

(10,939,251)

Issued and Premium on Fair value paid-up ordinary changes on Note share capital shares investment

20,400,278,730 2,456,261,491

-

(10,939,251)

Fair value changes on investment

Consolidated financial statements

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

The accompanying notes are an integral part of these financial statements.

Balance at 1 January 2009 Unrealised loss Change in fair value recognised in equity Currency translation

differences Total expense recognised directly in equity Profit for the year Total recognised income and expense Dividends Balance at 31 December 2009

-

-

-

-

2,456,261,491

20,400,278,730

Issued and paid-up Premium on Note share capital ordinary shares

The accompanying notes are an integral part of these financial statements.

Balance at 1 January 2008 Unrealised loss Change in fair value recognised in equity Total expense recognised directly in equity Change in minority interests from acquisition of subsidiaries’ shares Profit for the year Total recognised income and expense Dividends Balance at 31 December 2008

(in Baht)

For the years ended 31 December 2009 and 2008

Statements of changes in equity

Thai Oil Public Company Limited and its Subsidiaries

142 143


- -

- - - - - 20,400,278,730

30

- -

- - - - - 20,400,278,730

30

2,456,261,491

-

-

-

20,400,278,730

2,456,261,491

Premium on ordinary shares

Note

Issued and paid-up share capital

-

(19,604,723)

-

(8,665,472)

-

(8,665,472)

(8,665,472)

(10,939,251)

Fair value changes on investment

12,451,700,312

(9,179,670,903)

(1,536,312,781)

(1,536,312,781)

-

-

23,167,683,996

Unappropriated

37,581,829,155

(9,179,670,903)

(1,547,252,032)

(1,536,312,781)

(10,939,251)

(10,939,251)

48,308,752,090

2,040,027,873

-

-

-

-

-

2,040,027,873

Legal reserve

244,500,000

-

-

-

-

-

244,500,000

Other

Retained earnings

17,356,121,914

(4,181,756,830)

9,086,178,432

9,086,178,432

-

-

12,451,700,312

Unappropriated

42,477,585,285

(4,181,756,830)

9,077,512,960

9,086,178,432

(8,665,472)

(8,665,472)

37,581,829,155

Total equity attributable to equity holders of

(in Baht)

For the years ended 31 December 2009 and 2008

Thai Oil Public Company Limited and its Subsidiaries

244,500,000

-

-

-

-

-

244,500,000

Other

Total equity attributable to equity holders of

Statements of changes in equity

2,040,027,873

-

-

-

-

-

2,040,027,873

Legal reserve

Retained earnings

Separate financial statements

(10,939,251)

-

(10,939,251)

-

(10,939,251)

(10,939,251)

Fair value changes on investment

Separate financial statements

(in Baht)

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

The accompanying notes are an integral part of these financial statements.

Balance at 1 January 2009 Unrealised loss Change in fair value recognised

in equity Total expense recognised

directly in equity Profit for the year Total recognised income and expense Dividends Balance at 31 December 2009

2,456,261,491

-

-

-

20,400,278,730

2,456,261,491

Premium on ordinary shares

Note

Issued and paid-up share capital

The accompanying notes are an integral part of these financial statements.

Balance at 1 January 2008 Unrealised loss Change in fair value recognised

in equity Total expense recognised

directly in equity Loss for the year Total recognised income and expense Dividends Balance at 31 December 2008

For the years ended 31 December 2009 and 2008

Statements of changes in equity

Thai Oil Public Company Limited and its Subsidiaries

144 145


146

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Statements of cash flows

147

Statements of cash flows (in Baht)

Note

Cash flows from operating activities Profit (loss) for the year Adjustments for Depreciation and amortisation Finance costs Unrealised (gain) loss on foreign exchange Share of loss of associates Dividend income (Gain) loss on disposal of property,

plant and equipment Gain on disposal of assets held for sale Realisation of deferred land lease and other income Income tax expense Reversal of allowance for impairment losses on investments Changes in operating assets and liabilities Trade accounts receivable Inventories Other current assets Other non-current assets Trade accounts payable Excise duty payable Other current liabilities Other non-current liabilities Income tax paid Income tax received Net cash provided by operating activities

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

12,454,767,466

559,352,461

9,086,178,432

(1,536,312,781)

6,552,677,115

6,148,072,074

4,065,839,933

4,006,798,092

26

2,114,723,892

2,116,400,519

1,872,759,954

1,702,603,891

(845,931,177)

1,473,030,765

(683,834,165)

1,312,668,549

12

26,887,524

2,035,451

-

-

11

-

-

(5,804,912,223)

(1,761,387,671)

(23,602,967)

1,435,304

(482,801)

768,410

(60,232,256)

(13,795,304)

-

-

(10,443,950)

(10,393,624)

(102,700,252)

(98,763,672)

27

2,004,749,154

(785,838,235)

1,123,934,028

(1,376,855,838)

-

(779,496,900)

-

(779,496,900)

22,213,594,801

8,710,802,511

9,556,782,906

1,470,022,080

(4,840,424,030)

9,082,265,410

(5,507,178,731)

9,094,194,512

(8,254,306,045)

12,684,729,041

(6,776,068,847)

11,798,876,893

(436,258,551)

(4,006,880,025)

(772,290,476)

(3,668,040,088)

(210,111,352)

(257,592,924)

(163,171,980)

(256,522,827)

2,482,531,862

(10,468,877,402)

2,676,653,575

(11,104,389,932)

595,526,125

(509,434,771)

595,526,125

(509,434,771)

222,828,654

(73,676,081)

325,980,846

(27,539,246)

73,279,129

104,275,343

82,126,689

161,951,985

(861,144,004)

(6,824,405,235)

(208,664,921)

(6,130,119,966)

4,350,000,616

-

4,350,000,000

-

15,335,517,205

8,441,205,867

4,159,695,186

828,998,640

The accompanying notes are an integral part of these financial statements.

(in Baht)

Note

Cash flows from investing activities Dividends received (Purchase) sale of current investments Purchase of other long-term investments Cash outflow on short-term loans to related parties Cash inflow on short-term loans to

related parties Cash outflow on investments in subsidiaries Cash outflow on investments in associates Proceeds from disposal of

investments in associates Cash outflow on long-term loans to savings co-operative of employees Purchase of property, plant and equipment Sale of property, plant and equipment Sale of assets held for sale Purchase of intangible assets Cash outflow on acquisition of business Currency translation differences Net cash provided by (used in)

investing activities

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

-

-

5,804,912,223

1,761,387,671

(80,877,443)

8,027,021

-

-

(105,863,192)

(129,601,876)

(105,863,192)

(129,601,876)

5

-

-

(1,848,500,000)

(2,936,000,000)

5

-

-

1,000,000,000

1,295,000,000

4, 11

-

(639,058,009)

(219,000,000)

(1,250,999,970)

12

-

(86,250,000)

-

(86,250,000)

12

-

-

202,500,000

-

(10,065,996)

(3,169,121)

(10,065,996)

(3,169,121)

(1,353,382,258)

(6,291,491,071)

(673,108,162)

(2,864,282,947)

53,335,170

7,771,536

1,838,656

5,634,374

211,771,561

82,990,504

-

-

(21,179,875)

(650,445,995)

(18,313,783)

(234,845,136)

4

(1,154,082,128)

(1,939,740,763)

-

-

(5,380,545)

-

-

-

(2,465,724,706)

(9,640,967,774)

4,134,399,746

(4,443,127,005)

The accompanying notes are an integral part of these financial statements.


148

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Statements of cash flows

Notes to the financial statements (in Baht)

Note

Cash flows from financing activities Finance costs paid Dividends paid Repayment of short-term borrowings

from financial institutions Proceeds from short-term borrowings

from financial institutions Proceeds from short-term borrowings

from related parties Repayment of long-term borrowings

from financial institutions Proceeds from long-term borrowings

from financial institutions Proceeds from issue of debentures Net cash provided by (used in)

financing activities Net increase in cash and cash equivalents Cash and cash equivalents

at beginning of year Cash and cash equivalents at end of year Non-cash transaction Payable on purchase of property, plant and equipment

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

(2,069,849,949)

(2,018,188,980)

(1,776,560,126)

(1,639,297,659)

(4,334,071,104)

(9,367,751,717)

(4,181,756,830)

(9,179,670,903)

(6,730,286,724)

-

(6,730,286,724)

-

-

7,601,578,963

-

7,601,578,963

5

-

-

3,165,670,800

-

(12,134,674,363)

(10,320,521,060)

(9,766,480,000)

(6,641,505,000)

1,001,000,000

16,107,845,000

1,000,000,000

13,032,845,000

12,000,000,000

3,000,000,000

12,000,000,000

3,000,000,000

(12,267,882,140)

5,002,962,206

(6,289,412,880)

6,173,950,401

601,910,359

3,803,200,299

2,004,682,052

2,559,822,036

8,016,204,295

4,213,003,996

3,670,608,211

1,110,786,175

6

8,618,114,654

8,016,204,295

5,675,290,263

3,670,608,211

70,479,758

100,702,685

59,048,205

83,400,332

These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Board of Directors on 19 February 2010.

1 General information

Thai Oil Public Company Limited, the “Company”, is incorporated in Thailand and has its registered offices and refinery plant as follows: Head office : 123 Suntowers Building B, 16th Floor, Vibhavadi Rangsit Road, Kwang Chomphon, Khet Chatuchak, Bangkok 10900, Thailand Sriracha office and refinery plant : 42/1 Moo 1, Sukhumvit Road Km. 124, Tambol Tungsukla, Amphur Sriracha, Cholburi 20230, Thailand The Company was listed on the Stock Exchange of Thailand on 26 October 2004. The Company is an entity in the PTT Public Company Limited (“PTT”) group of companies. PTT is incorporated in Thailand and is the major shareholder of the Company and owned 49.1% of the Company’s issued and paid-up share capital as at 31 December 2009 (31 December 2008: 49.1%). The principal businesses of the Company are oil refining and distributions. Details of the Company’s direct and indirect subsidiaries as at 31 December 2009 and 2008 were as follows: Name of entities

Direct subsidiaries Thai Paraxylene Co., Ltd. Thai Lube Base Public Company Limited Thaioil Marine Co., Ltd.

Thaioil Energy Solutions Co., Ltd. (formerly Thaioil Energy Co., Ltd.) The accompanying notes are an integral part of these financial statements.

149

Type of business

Country of incorporation

Paraxylene manufacturing Lube base oil refining and distribution Providing marine transportation services for petroleum and liquid chemical products Power generation and providing of energy-related consulting services

Ownership interest (%) 2009 2008

Thailand Thailand

99.99 99.99

Thailand

99.99

Thailand

99.99

99.99 99.99 99.99 99.99


150

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements Name of entities

Thaioil Solvent Co., Ltd.

Thaioil Ethanol Co., Ltd.

Thaioil Power Co., Ltd.

Indirect subsidiaries TOP Independent Power Co., Ltd. TOP Solvent Co., Ltd.

Independent Power (Thailand) Co., Ltd. Sak Chaisidhi Co., Ltd.

TOP Solvent (Vietnam) LLC.

151

Notes to the financial statements

Type of business

Country of incorporation

Investment in solvent and petrochemical businesses Investment in ethanol business and alternative energy products Power and steam generation Power generation Distribution of solvent and petrochemical products

Thailand Thailand Thailand Thailand Thailand

Power generation Solvent and petrochemical products manufacturing and distribution Distribution of solvent and petrochemical products

Ownership interest (%) 2009 2008

99.99 99.99 54.99

99.99 99.99 54.99

- 99.99

99.99 99.99

Thailand

80.00*

Thailand Vietnam

80.52 100.00

80.00* 80.52 100.00

* The Company and a subsidiary (Thaioil Power Co., Ltd.) hold a 24% and 56% interest in Independent Power (Thailand) Co., Ltd. respectively.

2 Basis of preparation of the financial statements

The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language. The financial statements are prepared in accordance with Thai Accounting Standards (“TAS”) and Thai Financial Reporting Standards (“TFRS”) including related interpretations and guidelines promulgated by the Federation of Accounting Professions (“FAP”) and with generally accepted accounting principles in Thailand.

The Company and local subsidiaries have adopted the following revised TAS and TFRS and accounting guidance which were issued by the FAP during 2008 and 2009, which are relevant to their operations, and effective for accounting periods beginning on or after 1 January 2009: TAS 36 (revised 2007) Impairment of Assets TFRS 5 (revised 2007) Non-current Assets Held for Sale and Discontinued Operations Framework for the Preparation and Presentation of Financial Statements (revised 2007) (effective on 26 June 2009) Accounting Guidance about Leasehold Right (effective on 26 June 2009) Accounting Guidance about Business Combination under Common Control The adoption of these revised TAS and TFRS and accounting guidance does not have any material impact on the consolidated and separate financial statements. The FAP has issued during 2009 a number of new and revised TAS and TFRS which are not currently effective and have not been adopted in the preparation of these financial statements. These new and revised TAS, which are relevant to the operations of the Company and local subsidiaries are disclosed in note 36 to the financial statements. The financial statements are presented in Thai Baht, rounded in the notes to the financial statements to the nearest thousand unless otherwise stated. They are prepared on the historical cost basis except as stated in the accounting policies. The preparation of financial statements in conformity with TAS and TFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised and in any future periods affected. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes to the financial statements: Note 4 to the financial statements Acquisitions Note 7 to the financial statements Other investments Note 14 to the financial statements Intangible assets Note 15 to the financial statements Deferred income tax Note 31 to the financial statements Financial instruments


152

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements 3 Significant accounting policies

(a) Basis of consolidation The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interests in associates. Business combinations Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group. Associates Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. The consolidated financial statements include the Group’s share of the income, expenses and equity movements of associates, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an associate, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (b) Foreign currencies Foreign currency transactions Transactions in foreign currencies are translated to Thai Baht at the foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in the statement of income.

153

Notes to the financial statements Non-monetary assets and liabilities measured at cost in foreign currencies are translated to Thai Baht using the foreign exchange rates ruling at the dates of the transactions. Foreign entities The assets and liabilities of foreign entities are translated to Thai Baht at the foreign exchange rates ruling at the reporting date. Goodwill and fair value adjustments arising on the acquisition of foreign entities are stated at exchange rates ruling at the reporting date. The revenues and expenses of foreign entities are translated to Thai Baht at the average foreign exchange rates ruling during the periods. Foreign exchange differences arising on translation are recognised in a separate component of equity until disposal of the investments. Where monetary items, in substance, form part of the Group’s net investment in a foreign entity, foreign exchange differences arising on such monetary items and related hedges are recognised directly in a separate component of equity until disposal of the investment. (c) Derivative financial instruments Derivative financial instruments are used to manage exposure to foreign exchange, interest rate and commodity price risks arising from operational, financing and investment activities. Derivative financial instruments are not used for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. Hedge of future foreign currency transactions Forward foreign exchange contracts hedging future foreign currency transactions are revalued at the reporting date at the foreign exchange rate ruling on that date. Differences on revaluation are recognised in the statement of income. Cross currency swap and interest rate swap contracts Financial assets and liabilities hedged by forward exchange contracts at the reporting date are translated at the contracted forward exchange rates. The differences from translation are recognised in the statement of income. The differences under interest rate swaps are recorded as adjustments to the interest expense relating to the financial obligations in the statement of income. Hedge of Crack Spread and Time Spread Difference between the fixed prices of contracts and the settlement prices are recognised in the statement of income in the period in which the contracts mature.


154

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements (d) Cash and cash equivalents Cash and cash equivalents in the statement of cash flows comprise cash balances, savings and current accounts, and highly liquid short-term investments. Bank overdrafts that are repayable on demand are

a component of financing activities for the purpose of the statement of cash flows. (e) Trade and other accounts receivable Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts. The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred. (f) Inventories Raw materials, work in progress and finished goods Inventories are stated at the lower of cost and net realisable value. Cost of inventories is calculated using weighted average cost. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale. Crude oil, feedstock and finished and semi-finished oil products Cost of crude oil, feed stock and finished and semi-finished oil products is calculated using the weighted average cost principle. Materials, spare parts and supplies Cost of materials, spare parts and supplies is calculated using the weighted average cost principle. (g) Investments Investments in subsidiaries and associates Investments in subsidiaries and associates in the separate financial statements of the Company are accounted for using the cost method. Investments in associates in the consolidated financial statements are accounted for using the equity method.

Investments in other debt and equity securities Debt securities that the Group has the positive intent and ability to hold to maturity are classified as held-tomaturity investments. Held -to-maturity investments are stated at amortised cost, less any impairment losses. The difference between the acquisition cost and redemption value of such debt securities is amortised using the effective interest rate method over the period to maturity.

155

Notes to the financial statements Debt securities and marketable equity securities, other than those securities held for intended to be held to maturity, are classified as available-for-sale investments. Available-for-sale investments are, subsequent to initial recognition, stated at fair value, and changes therein, other than impairment losses and foreign currency differences on available -for- sale monetary items, are recognised directly in equity. The exceptions are impairment losses and foreign exchange gains and losses, which are recognised in the statement of income. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in the statement of income. Equity securities which are not marketable are stated at cost less any impairment losses. Disposal of investments On disposal of an investment, the difference between net disposal proceeds and the carrying amount together with the associated cumulative gain or loss that was reported in equity is recognised in the statement of income. If the Group disposes of part of its holding of a particular investment, the deemed cost of the part sold is determined using the weighted average method applied to the carrying value of the total holding of the investment. (h) Property, plant and equipment The Group’s owned assets Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation Depreciation is charged to the statement of income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment (except the power plant of Thaioil Power Company Limited which is depreciated by the units of production method). The estimated useful lives are as follows: Buildings 10-25 years Leasehold improvements 5-20 years Refinery plant and equipment (depreciated over the remaining estimated useful life starting from 1 October 1994) 20 years Lube base oil refinery plant and equipment 16-20 years Paraxylene plant 10-25 years Power plant 25 years Transmission facilities 20 years Machinery, equipment and plant equipment 3-20 years Oil and liquid chemical tankers 10-25 years Furniture, fixtures, office equipment and others 5-10 years Vehicles 5 years No depreciation is provided on freehold land and assets under construction.


156

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements ( i ) Intangible assets Goodwill Goodwill in a business combination represents the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired. Goodwill is measured at cost less impairment losses. Goodwill is tested for impairment as described in note

3 ( j) to the financial statements. Customer database Customer database is stated at cost less impairment losses. License fee and computer software License fee and computer software that are acquired by the Group, which have finite useful lives, are stated at cost less accumulated amortisation and impairment losses. Amortisation Amortisation is charged to the statement of income on a straight-line basis over their estimated useful lives from the date that they are available for use. The estimated useful lives are as follows: License fee 10-15 years Computer software 5-10 years Deferred charges Deferred charges are amortised over the estimated periods to which the benefits relate, which are principally in line with the agreements to which such deferred charges relate. ( j ) Impairment The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill, the recoverable amount is estimated at each reporting date, and as and when indicators of impairment are identified. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in the statement of income unless it reverses a previous revaluation credited to equity, in which case it is charged to equity. When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the value of the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the statement of income even though the financial asset has not

157

Notes to the financial statements been derecognised. The amount of the cumulative loss that is recognised in the statement of income is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the statement of income. Calculation of recoverable amount The recoverable amount of the Group’s investments in held-to-maturity securities and receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate. Receivables with a short duration are not discounted. The recoverable amount of available -for-sale assets is calculated by reference to the fair value. The recoverable amount of a non- financial asset is the greater of the asset’s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Reversals of impairment An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised. For financial assets carried at amortised cost and available - for - sale financial assets that are debt securities, the reversal is recognised in the statement of income. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity. An impairment loss in respect of goodwill is not reversed. Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (k) Discount on debentures Discount on debentures, comprising the difference between proceeds from debentures issuance and redemption value on maturity, is recognised in the statement of income over the period of the borrowings on an effective interest basis. (l) Interest-bearing liabilities Interest-bearing liabilities are stated at cost. (m) Trade and other accounts payable Trade and other accounts payable are stated at cost.


158

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements (n) Employee benefits Provident fund Obligations for contributions to provident fund are recognised as an expense in the statement of income as incurred. Retirement gratuity fund Obligations for contributions to retirement gratuity fund are computed on the benefit formula at the reporting date and are recognised as an expense in the statement of income. Benefits are payable upon retirement, disability, death or resignation. (o) Provisions A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. (p) Revenue Revenue excludes value added taxes or other sales taxes and is arrived at after deduction of trade discounts. Sale of goods and services rendered Revenue is recognised in the statement of income when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs or the probable return of goods. Service income is recognised as services are provided. Rental income Rental income from assets is recognised in the statement of income on a straight-line basis over the term of the lease. Interest and dividend income Interest income is recognised in the statement of income as it accrues. Dividend income is recognised in the statement of income on the date the Group’s right to receive payments is established which in the case of quoted securities is usually the ex-dividend date. (q) Expenses Operating leases Payments made under operating leases are recognised in the statement of income on a straight line basis over the term of the lease. Contingent rentals are charged to the statement of income for the accounting period in which they are incurred.

159

Notes to the financial statements Repair and maintenance expenses Expenditure on repair and maintenance is charged to the statement of income in the period in which the expenditure is incurred. Expenditure of a capital nature is added to the cost of the related plant and equipment. Finance costs Interest expenses and similar costs are charged to the statement of income for the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale. (r) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit; and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.


160

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements

4 Acquisitions

On 2 November 2009 an indirect subsidiary (TOP Solvent (Vietnam) LLC.) acquired the solvent and petrochemical distribution business in Vietnam of the Shell Vietnam Limited (“acquiree”). The acquiree’s assets at the acquisition date comprised: (in thousand Baht)

Recognised value Fair value adjustments

Trade accounts receivable Inventories Property, plant and equipment Net identifiable assets Goodwill on acquisition Consideration paid

108,972 137,567 175,716 422,255 731,827 1,154,082

- - 57,538 57,538

Carrying amount

108,972 137,567 118,178 364,717

On 1 December 2008 an indirect subsidiary (TOP Solvent Co., Ltd.) acquired 80.52% of the issued registered shares of Sak Chaisidhi Co., Ltd. (“acquiree”). The acquiree’s net assets at the acquisition date comprised: (in thousand Baht)

Recognised value Fair value adjustments

Cash and deposits at financial institutions Trade accounts receivable Inventories Other current assets Property, plant and equipment Other assets Trade accounts payable Other current liabilities Net identifiable assets and liabilities Less minority interests Consideration paid Cash received Net cash outflow

92,140 8,520 55,798 2,975 698,187 11,522 (61,125) (17,585) 790,432 (59,234) 731,198 (92,140) 639,058

161

- - - - 486,355 - - - 486,355

Carrying amount

92,140 8,520 55,798 2,975 211,832 11,522 (61,125) (17,585) 304,077

Sak Chaisidhi Co., Ltd’s operation for the month of December 2008 was reported a net profit of Baht 1.5 million.

On 1 December 2008 an indirect subsidiary (TOP Solvent Co., Ltd.) acquired the solvent distribution business in Thailand of the Shell Company of Thailand Limited (“acquiree”). The acquiree’s assets at the acquisition date comprised:

(in thousand Baht)

Trade accounts receivable Inventories Intangible assets Net identifiable assets and liabilities Consideration paid

Recognised value Fair value adjustments

1,362,494 371,888 205,359 1,939,741 1,939,741

Carrying amount

- (9,852) 205,359 195,507

1,362,494 381,740 - 1,744,234

5 Related party transactions and balances

Related parties are those parties linked to the Group and the Company as shareholders or by common shareholders or directors. Transactions with related parties are conducted at prices based on market prices or, where no market price exists, at contractually agreed prices. Relationships with related parties that control or jointly control the Group or are being controlled or jointly controlled by the Group or have transactions with the Group are as follows: Name of entities

PTT Public Company Limited Thai Paraxylene Co., Ltd. Thai Lube Base Public Company Limited Thaioil Marine Co., Ltd. Thaioil Energy Solutions Co., Ltd. Thaioil Solvent Co., Ltd. Thaioil Ethanol Co., Ltd. Thaioil Power Co., Ltd. TOP Solvent Co., Ltd. Independent Power (Thailand) Co., Ltd. Sak Chaisidhi Co., Ltd. TOP Solvent (Vietnam) LLC.

Country of incorporation

Thailand Thailand Thailand Thailand Thailand Thailand Thailand Thailand Thailand Thailand Thailand Vietnam

Nature of relationships

Major shareholder Subsidiary and/or common directors Subsidiary and/or common directors Subsidiary and/or common directors Subsidiary and/or common directors Subsidiary and/or common directors Subsidiary and/or common directors Subsidiary and/or common directors Indirect subsidiary and/or common directors Indirect subsidiary and/or common directors Indirect subsidiary and/or common directors Indirect subsidiary and/or common directors


162

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements (in thousand Baht)

Country of incorporation

Name of entities

PTT ICT Solutions Co., Ltd. Maesod Clean Energy Co., Ltd. PTT International Trading Pte. Ltd. Star Petroleum Refining Co., Ltd. IRPC Public Company Limited PTT Aromatics and Refining Public Company Limited Bangchak Petroleum Public Company Limited PTT Chemical Public Company Limited PTT Phenol Co., Ltd. Thai Petroleum Pipeline Co., Ltd.

Thailand Thailand Singapore Thailand Thailand Thailand Thailand Thailand Thailand Thailand

Nature of relationships

Associate and/or common directors Indirect associate and/or common directors Subsidiary of major shareholder Associate of major shareholder Associate of major shareholder Associate of major shareholder Associate of major shareholder Associate of major shareholder Associate of major shareholder Related company and/or common directors

Other income Other expenses

Subsidiaries Revenue from sale of goods and rendering of services Purchase of crude oil and feedstock Purchase-sale of crude oil and feedstock for legal reserve* Purchase of assets Interest income Dividend income Land lease income Other income Interest expense Other expenses

The pricing policies for particular types of transactions are explained further below: Transactions

Revenue from sale of goods and rendering of services, lease income, purchase of goods and assets Interest income and expense Dividend income Other income and expenses Directors’ remuneration

Pricing policies

Market prices or, where no market price exists, at contractually agreed prices Agreed rates stipulated in the agreements Right to receive dividends Contractually agreed prices Amounts approved by the Group’s shareholders

Associate Other expenses Purchase of assets

Other related parties

Significant transactions for the years ended 31 December 2009 and 2008 with related parties were as follows: (in thousand Baht)

Major shareholder Revenue from sale of goods and rendering of services Purchase of crude oil and feedstock Purchase-sale of crude oil and feedstock for legal reserve*

163

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

147,393,743 134,987,205 1,582,800

216,481,269 235,856,117 11,414,360

142,190,255 123,950,427 1,582,800

211,416,432 225,390,860 11,414,360

Revenue from sale of goods and rendering of services Purchase of crude oil and feedstock Other income Other expenses

Directors’ remuneration

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

44,845 477,999

28,835 1,858,837

44,834 468,426

28,835 1,857,690

- - - - - - - - - - 43,082 8,592

- - - - - - - - - - 46,538 57,995

40,082,137 29,648,241 357,440 14,795 139,908 5,804,912 48,395 674,545 19,445 343,403 43,082 8,592

51,060,890 38,034,098 1,835,076 - 114,304 1,761,388 44,946 726,954 - 144,410 45,473 37,495

11,650,331 2,577,503 20,424 62,697 90,229

19,235,832 1,061,419 9,687 42,617 105,962

9,737,480 301,960 20,424 62,697 39,499

16,758,359 253,869 9,687 42,617 63,584

* Purchase-sale of crude oil and feedstock transactions entered for the purpose of maintaining the legal levels of crude oil inventory are transacted with related parties and have already been reversed in the financial statements for the years ended 31 December 2009 and 2008.


164

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements Other accounts receivable-related parties

Balances as at 31 December 2009 and 2008 with related parties were as follows: Trade accounts receivable-related parties

Major shareholder PTT Public Company Limited

Subsidiaries Thai Paraxylene Co., Ltd. Thai Lube Base Public Company Limited Thaioil Power Co., Ltd.

Other related parties PTT International Trading Pte. Ltd. Star Petroleum Refining Co., Ltd. IRPC Public Company Limited PTT Aromatics and Refining Public Company Limited Bangchak Petroleum Public Company Limited PTT Chemical Public Company Limited Thai Petroleum Pipeline Co., Ltd. Less allowance for doubtful accounts Net

165

Consolidated financial statements

(in thousand Baht)

Separate financial statements

2009

2008

2009

2008

7,655,683 - - - 801 - 124,289 - 548,958 1,432 2,404 8,333,567 - 8,333,567

5,247,751 - - - 812,125 160,131 59,875 158,712 183,821 1,505 - 6,623,920 (266) 6,623,654

7,403,113 3,242,357 126,065 65,417 - - - - 548,632 - - 11,385,584 - 11,385,584

5,120,859 1,312,460 30,119 58,525 811,423 160,131 48,452 158,712 182,774 - - 7,883,455 - 7,883,455

Major shareholder PTT Public Company Limited

Subsidiaries Thai Paraxylene Co., Ltd. Thai Lube Base Public Company Limited Thaioil Marine Co., Ltd. Thaioil Energy Solutions Co., Ltd. Thaioil Solvent Co., Ltd. Thaioil Ethanol Co., Ltd. Thaioil Power Co., Ltd. TOP Solvent Co., Ltd. Independent Power (Thailand) Co., Ltd. Sak Chaisidhi Co., Ltd.

Associate PTT ICT Solutions Co., Ltd. Total

(in thousand Baht)

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

10,137 - - - - - - - - - - 15,375 25,512

67,714 - - - - - - - - - - 15,593 83,307

9,124 22,780 23,726 3,046 5,788 17,339 162 23,233 404 2,559 79 15,375 123,615

66,830 14,281 7,925 3,134 13,401 449 24 - - 27,757 - 15,593 149,394

Short-term loans to related parties (in thousand Baht)

Subsidiaries Thaioil Marine Co., Ltd. Thaioil Solvent Co., Ltd. Total

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

- - -

- - -

1,622,500 2,385,000 4,007,500

1,694,000 1,465,000 3,159,000

Interest rates during the years of 2009 and 2008 were charged at money market rate (MMR) but not exceeding the average minimum loan rate (MLR) of 5 financial institutions less margin.


166

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements

Movements of short-term loans to related parties during the years ended 31 December 2009 and 2008 were

as follows: (in thousand Baht)

At 1 January Increase Decrease At 31 December

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

- - - -

- - - -

3,159,000 1,848,500 (1,000,000) 4,007,500

1,518,000 2,936,000 (1,295,000) 3,159,000

(in thousand Baht)

Major shareholder PTT Public Company Limited

Subsidiaries Thai Paraxylene Co., Ltd. Thai Lube Base Public Company Limited Thaioil Power Co., Ltd. Sak Chaisidhi Co., Ltd.

Other related parties Star Petroleum Refining Co., Ltd. IRPC Public Company Limited PTT Aromatics and Refining Public

Company Limited Total

Consolidated financial statements

Other accounts payable-related parties (in thousand Baht)

Trade accounts payable-related parties

167

Major shareholder PTT Public Company Limited

Subsidiaries Thai Paraxylene Co., Ltd. Thai Lube Base Public Company Limited Thaioil Marine Co., Ltd. Thaioil Energy Solutions Co., Ltd. Thaioil Power Co., Ltd. Independent Power (Thailand) Co., Ltd.

Associate

Separate financial statements

PTT ICT Solutions Co., Ltd.

2009

2008

2009

2008

10,996,439 - - - - - 55,901 110,720 11,163,060

10,450,064 - - - - 17,461 77,088 17,461 10,562,074

9,413,470 2,025,225 166,960 97,294 1,150 - - - 11,704,099

8,492,049 1,202,336 130,994 112,410 - - 36,237 - 9,974,026

Other related party Thai Petroleum Pipeline Co., Ltd. Total

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

362,181 - - - - - - 24,428 2,748 389,357

7,415 - - - - - - 39,774 4,922 52,111

361,501 268 12,519 33,353 9,138 - 5,290 24,428 2,748 449,245

6,898 388 6,450 6,160 - 3,166 887 19,274 4,922 48,145

Short-term borrowings from related parties (in thousand Baht)

Subsidiaries Thai Paraxylene Co., Ltd. Thai Lube Base Public Company Limited Thaioil Marine Co., Ltd. Total

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

- - - -

- - - -

1,063,392 2,064,811 37,468 3,165,671

- - - -

Interest rates during the year of 2009 were charged at money market rate (MMR) but not exceeding the average minimum loan rate (MLR) of 5 financial institutions less margin.


168

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements

Movements of short-term borrowings from related parties during the years ended 31 December 2009 and 2008 were as follows:

(in thousand Baht)

At 1 January Increases At 31 December

169

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

- - -

- - -

- 3,165,671 3,165,671

- - -

Significant agreements with related parties As at 31 December 2009 the Group had the following significant agreements with related parties. Raw Materials and Oil-Products Purchases and Sales Agreements The Company has raw materials and oil products purchase and sale agreements with a subsidiary, whereby the purchase and sale volumes and prices of raw materials and oil products are specified in the agreements. These agreements are effective on the agreement date and shall be terminated by either party giving at least 6 months notice in writing to the other party. Oil-Products Sale and Purchase Agreements The Company has oil products purchase and sale agreements with a subsidiary, whereby the purchase and sale volumes and prices are specified in the agreements. These agreements are effective on the agreement date and shall be terminated if either party does not comply with the terms stipulated in the agreements. By-Product Sale and Purchase Agreement The Company has a by -product purchase and sale agreement with a subsidiary, whereby the purchase and sale volumes and prices of the by-product are specified in the agreement. The agreement is for a period of 10 years commencing on the agreement date, or until the termination by mutual consent. Technology and Communication Service Agreement The Company has a technology and communication service agreement with an associate, whereby the service fees are specified in the agreement. The agreement is for a period of 5 years commencing on the agreement date and is renewable for additional periods of 5 years. Crack Spread Swap and Time Spread Swap Agreements The Company has crack spread swap and time spread swap agreements with a related company. The Company or the related company has commitments to make payments for the differences between the fixed price and floating

price for each period. As at 31 December 2009 the Company had oil volume under the agreements totaling 1.81 million barrels (31 December 2008: 0.45 million barrels). Product Offtake and Crude Oil Supply Agreement The Company has a product off take and crude oil supply agreement with a related company, whereby (a) the Company will sell and the related company will purchase refined petroleum products produced by the refinery for 49.99% of 270,000 barrels per day; and (b) the related party will supply and the Company will purchase crude oil and/ or feedstock for the refinery required to produce 49.99% of 270,000 barrels per day. The credit term for crude oil shall be mutually agreed. Feedstock Throughput Agreement The Company has an agreement with a related company to use the Company’s single buoy mooring facility for receiving its feedstock. The agreement is for a period of 15 years and the throughput fee is stipulated in the agreement. Crude Oil Processing Agreement The Company has an agreement for crude oil processing with a related company, whereby the related company will supply crude oil to the Company and the Company will provide a processing service. In this regard, the Company will either receive payments from or make payments to the related company depending on whether the processing fee for the different amount of products lifted by the related company is higher or lower than the value of relevant crude intake in the same month, including other expenses and finance costs, if any, incurred by both parties. There is no expiry date specified in the agreement. Long Residue Cracking and Fuel Oil Exchange Agreement The Company has a long residue cracking and fuel oil exchange agreement with a related company to exchange a related company’s long residue for cracking in the Company’s refinery process and to receive fuel oil left from the process for selling in the market. The agreement shall be terminated by either party giving at least 90 days notice in writing to the other party. Payments shall be made on a net settlement basis as stipulated in the agreement. Throughput Agreement The Company has throughput agreement with a related company, whereby the tariff fee is specified in the agreement. The agreement is for a period of 20 years and is renewable. Natural Gas Supply Agreements The Company and two subsidiaries have natural gas supply agreements with a related company, whereby the related company agrees to supply the natural gas to the Company and the subsidiaries at quantities and prices as stipulated in the agreements. These agreements are effective for periods of 8 to 25 years.


170

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements Cost Reimbursement Agreements Subsidiaries have cost reimbursement agreements with the Company covering the reimbursement of construction costs of natural gas pipeline facilities and the use of the pipeline facilities, raw water pipeline and the use of land for the construction of a transmission line connecting the subsidiary to the Electricity Generating Authority of Thailand (EGAT). Under the terms of the agreements, the subsidiaries agree to share the cost of investments on the basis and conditions stipulated in the agreements. These agreements are effective for a period of 25 years, or until the termination of the power purchase agreement entered into by the subsidiary with EGAT, whichever is sooner. Power and Steam Purchase Agreements Subsidiaries (the “sellers�) have power and steam purchase agreements for 20 and 25 years with the Company and two subsidiaries, whereby the sellers will sell power and steam energy to the Company and the subsidiaries at the agreed quantities and prices as stipulated in the agreements. Services and Supplies Agreements Subsidiaries have services and supplies agreements with the Company, whereby the Company provides the subsidiaries for the operating, repair and maintenance, management, controlling and administration, procurement, financial, accounting and human resource services. The subsidiaries agree to pay certain fees as stipulated in the agreements. These agreements are effective for periods of 3 years and 24 years or until the termination of the land lease agreement entered into by the subsidiaries with the Company, whichever is sooner. Land Lease Agreements Subsidiaries have land lease agreements with the Company to lease/sublease certain parcels of land ending in 2022 with total annual rental of Baht 22 million, and the rate will be adjusted every 5 years. Raw Materials and Petrochemical Products Purchase and Sale Agreements A subsidiary has raw materials and petrochemical products purchase and sale agreements with related companies, whereby the purchase and sale volumes and prices of raw materials and petrochemical products are specified in the agreements. These agreements are for periods of 3 to 15 years. Technical Service Agreement A subsidiary has technical service agreements with the Company and another subsidiary to provide a consultancy technical solutions service for energy-related and petrochemical businesses, whereby the service fees are specified in the agreements. These agreements are for a period of 3 years. Office Rental Agreements A subsidiary has office rental agreements with related company and another subsidiary, whereby the rental fees are specified in the agreements. These agreements have no specified expiry date so the compliance with conditions specified in the agreements is ongoing until either party giving at least 30 days written notice of termination to the other party.

171

Notes to the financial statements 6 Cash and cash equivalents (in thousand Baht)

Cash on hand Cash at banks-savings and current accounts Cash at banks -fixed deposits (maturity period less than 3 months from the investment date) Promissory notes issued by financial institutions Total

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

1,856 7,329,210

3,106 5,338,859

580 5,674,708

780 3,669,828

1,236,942

1,044,239

2

-

50,107 8,618,115

1,630,000 8,016,204

- 5,675,290

- 3,670,608

The currency denomination of cash and cash equivalents as at 31 December 2009 and 2008 was as follows: (in thousand Baht)

Thai Baht United States Dollars Other Total

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

7,883,352 642,934 91,829 8,618,115

7,614,090 402,023 91 8,016,204

5,673,037 2,135 118 5,675,290

3,668,362 2,246 - 3,670,608

As at 31 December 2009 subsidiaries pledged their savings, current and fixed deposits totaling Baht 1,267 million (2008: Baht 1,682 million) as collateral for credit facilities as described in note 17 to the financial statements. The subsidiaries can withdraw these deposits when needed as specified in the borrowing agreements.


172

- - - - 779,497 779,497 779,497 779,497 8,479,000 8,479,000

2008 2009

Dividend income

(in thousand Baht)

2008

9.19 9.19 Thai Petroleum Pipeline Co., Ltd.

All other investments of the Group as at 31 December 2009 and 2008 were denominated entirely in Thai Baht. Cash at banks-fixed deposits As at 31 December 2009 a subsidiary pledged its fixed deposits totaling Baht 455 million (2008: Baht 111 million) as collateral for credit facilities as described in note 17 to the financial statements. The subsidiary can redeem these deposits when needed. Equity securities-available-for-sale securities In 2007 the Company entered into MFC Energy Open End Fund with certain companies so as to raise funds from financial institution investors who are interested in investing in energy or relating energy business. In consideration thereof, the Company has a commitment to purchase a holding in this Fund, comprising 40 million units at par value of Baht 10, amounting to Baht 400 million. During 2009 the Company invested an additional 10.59 million units, totaling Baht 105.9 million. As at 31 December 2009 the Company had holdings in this Fund at fair value of Baht 232.8 million (2008: Baht 135.6 million).

- - 135,640 779,497 915,137 915,137

Oil transportation by pipeline

- - 232,838 779,497 1,012,335 1,012,335

Related party

410,845 539,101 135,640 779,497 915,137 1,454,238

2009

164,864 619,979 232,838 779,497 1,012,335 1,632,314

2008

-

2009

-

(%)

128,256

2008

455,115

(%)

2008

2009

Equity securities-available-for-sale securities Other non-marketable securities Total

2009

Type of Business

Other long-term investments

2008

Cash at bank-fixed deposits Promissory notes issued by financial institutions

2009

Cost method

Current investments

Separate financial statements

Paid-up capital

Consolidated financial statements

Ownership interest

Consolidated/Separate financial statements

(in thousand Baht)

7 Other investments

Other non- marketable securities

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

Notes to the financial statements

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

173


174

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

175

Notes to the financial statements (in thousand Baht)

8 Trade accounts receivable (in thousand Baht)

Consolidated financial statements

Related parties Other parties Less allowance for

doubtful accounts Total (Reversal of) doubtful debts expenses for the year

Separate financial statements

Note

2009

2008

2009

2008

5

8,333,567 11,857,166 20,190,733

6,623,920 8,614,403 15,238,323

11,385,584 6,197,714 17,583,298

7,883,455 4,193,406 12,076,861

- 20,190,733

(1,290) 15,237,033

- 17,583,298

- 12,076,861

(1,290)

-

-

-

Aging analyses for trade accounts receivable are as follows: (in thousand Baht)

Related parties Within credit terms Overdue: Less than 3 months Over 12 months Less allowance for

doubtful accounts Net

Consolidated financial statements

Separate financial statements

Note

2009

2008

2009

2008

8,331,874 1,693 - 8,333,567

6,623,654 - 266 6,623,920

11,385,584 - - 11,385,584

7,883,455 - - 7,883,455

- 8,333,567

(266) 6,623,654

- 11,385,584

- 7,883,455

5

Other parties Within credit terms Overdue: Less than 3 months 3 - 6 months 6 - 12 months Over 12 months Less allowance for

doubtful accounts Net Total

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

11,762,874

8,463,314

6,197,714

4,107,749

6,653 5,437 23,914 58,288 11,857,166

90,768 3,231 5,748 51,342 8,614,403

- - - - 6,197,714

85,657 - - - 4,193,406

- 11,857,166 20,190,733

(1,024) 8,613,379 15,237,033

- 6,197,714 17,583,298

- 4,193,406 12,076,861

The normal credit term granted by the Group ranges from 15 days to 90 days. Trade accounts receivable from other parties overdue for more than 12 months included receivable from a state enterprise of Baht 58.1 million (2008: Baht 45.8 million). As at 31 December 2009 the subsidiary is in the process of negotiation with the state enterprise and has taken appropriate legal advice that the debt should be received in full. Accordingly, no allowance for doubtful account has been made in respect of this debt. The currency denomination of trade accounts receivable as at 31 December 2009 and 2008 was as follows: (in thousand Baht)

Thai Baht United States Dollars Other Total

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

15,433,934 4,587,994 168,805 20,190,733

11,487,627 3,749,406 - 15,237,033

14,264,147 3,319,151 - 17,583,298

9,156,258 2,920,603 - 12,076,861


176

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

177

Notes to the financial statements

9 Inventories

10 Other current assets (in thousand Baht)

Consolidated

financial statements 2009 2008

Separate

financial statements 2009 2008

Crude oil and feedstock Materials, spare parts and supplies Finished and semi-finished oil products Goods in transit Crude oil Materials, spare parts and supplies Less allowance for decline in value of inventories adjusted to net realisable value Net

11,324,636 1,178,288 7,222,639 9,452,995 13,309 29,191,867 (255,277) 28,936,590

9,403,067 826,472 5,099,471 9,452,995 13,309 24,795,314 (249,236) 24,546,078

9,677,533 1,098,346 5,448,945 5,428,595 59,165 21,712,584 (1,167,867) 20,544,717

8,655,709 770,598 3,752,367 5,428,595 51,014 18,658,283 (888,274) 17,770,009

(in thousand Baht)

Prepaid expense Other accounts receivable Receivable from Oil Fuel Fund Current portion of long-term loans to savings co-operative of employees Other Total

Consolidated

financial statements 2009 2008

312,174 296,521 295,569 39,030 276,707 1,220,001

405,765 757,042 280,343 37,636 579,288 2,060,074

Separate

financial statements 2009 2008

197,984 168,158 295,569 39,030 198,966 899,707

248,875 562,467 280,343 37,636 154,900 1,284,221

11 Investments in subsidiaries (in thousand Baht)

As at 31 December 2009 the Group and the Company’s inventories as stated above included a legal reserve amounting to Baht 7,888 million and Baht 7,350 million respectively (2008: Baht 5,851 million and Baht 5,507 million respectively). The cost of inventories which is recognised as an expense and included in cost of sale of goods for the year ended 31 December 2009 amounted to Baht 268,214 million (2008: Baht 392,842 million) in the consolidated financial statements and Baht 270,383 million (2008: Baht 400,226 million) in the separate financial statements. In 2009 the Group and the Company recognised an allowance for decline in value of inventories adjusted to net realisable value of Baht 255 million and Baht 249 million respectively (2008: Baht 1,168 million and Baht 888 million respectively) and recognised a recovery of allowance for decline in value of inventories adjusted to net realisable value of Baht 1,168 million and Baht 888 million respectively (2008: Baht 26 million and Baht 9 million respectively).

At 1 January Acquisitions At 31 December

Separate financial statements 2009 2008

8,094,387 219,000 8,313,387

6,843,387 1,251,000 8,094,387


Thai Paraxylene Co., Ltd. Thai Lube Base Public Company Limited Thaioil Marine Co., Ltd. Thaioil Energy Solutions Co., Ltd. Thaioil Solvent Co., Ltd. Thaioil Ethanol Co., Ltd. Thaioil Power Co., Ltd. Independent Power (Thailand) Co., Ltd. Total

Subsidiaries

99.99 99.99 99.99 99.99 99.99 99.99 54.99 24.00

(%)

99.99 99.99 99.99 99.99 99.99 99.99 54.99 24.00

(%)

Ownership interest 2009 2008

2,572,414 1,757,891 630,000 40,000 1,250,000 220,000 2,810,000 1,771,000 11,051,305

2009

2,572,414 1,757,891 630,000 40,000 1,250,000 1,000 2,810,000 1,771,000 10,832,305

2008

2,161,193 1,978,726 630,000 40,000 1,250,000 220,000 1,545,500 487,968 8,313,387

2009

2008

- 1,532,881 - - - - 154,550 73,957 1,761,388

2009

4,951,897 676,788 - - - - 154,550 21,677 5,804,912

2008

Dividend income

(in thousand Baht)

Thai Oil Public Company Limited and its Subsidiaries

12 Investments in associates

2,161,193 1,978,726 630,000 40,000 1,250,000 1,000 1,545,500 487,968 8,094,387

Separate financial statements Paid-up capital Cost method

Investments in subsidiaries as at 31 December 2009 and 2008, and dividend income from those investments for the years then ended were as follows:

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Thai Oil Public Company Limited and its Subsidiaries

178 THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

At 1 January Share of net loss of

investments-equity method Acquisitions Disposals At 31 December 229,198 (26,887) - - 202,311

179

Notes to the financial statements

For the years ended 31 December 2009 and 2008

(in thousand Baht)

Consolidated

financial statements 2009 2008

144,984 (2,036) 86,250 - 229,198

Separate

financial statements 2009 2008

232,500 - - (202,500) 30,000 146,250 - 86,250 - 232,500


180 -

-

-

2008

Thai Oil Public Company Limited and its Subsidiaries - 232,500

For the years ended 31 December 2009 and 2008

On 4 March 2009 the Company sold 30% of paid-up capital of an associate (Maesod Clean Energy Co., Ltd.) to a subsidiary (Thaioil Ethanol Co., Ltd.) of Baht 202.5 million, then Maesod Clean Energy Co., Ltd. became the Company’s indirect associate. As at 31 December 2009 and 2008 the financial information on associates which have been accounted for using the equity method based on the percentage of ownership held by the Group are as follows:

PTT ICT Solutions Co., Ltd. Maesod Clean Energy Co., Ltd. Total

2008 PTT ICT Solutions Co., Ltd. Maesod Clean Energy Co., Ltd. Total

PTT ICT Solutions Co., Ltd. Maesod Clean Energy Co., Ltd. Total

(in thousand Baht)

Ownership interest (%)

2009

150,000

825,000

30,000

- 202,500 -

30.00

-

675,000

-

- 30,000 30,000 150,000 20.00 20.00

2009 (%)

2008

(%)

2009

150,000

2008 2009

2009

Notes to the financial statements

2008

Cost method Paid-up capital Ownership interest

Separate financial statements

Dividend income

(in thousand Baht)

- 229,198

825,000

825,000

232,500

232,500

202,311

-

- 182,278 30.00 30.00

675,000

675,000

202,500

202,500

162,285

-

- 46,920 20.00 20.00

150,000

150,000

30,000

30,000

40,026

-

2008 2009 2008 2009 2008 2009 (%)

PTT ICT Solutions Co., Ltd. Maesod Clean Energy Co., Ltd. Total

2009

2008

(%)

2009

2008

Cost method Paid-up capital Ownership interest

Consolidated financial statements

Investments in associates as at 31 December 2009 and 2008, and dividend income for the years then ended were as follows:

Equity method

Dividend income

(in thousand Baht)

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Thai Oil Public Company Limited and its Subsidiaries

181

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

20 30 20 30

Total assets

881,824 2,767,497 3,649,321 828,035 2,046,573 2,874,608

Total liabilities

681,693 2,226,546 2,908,239 593,435 1,438,979 2,032,414

Total revenues

853,498 340,716 1,194,214 937,913 14,298 952,211

Profit (loss)

(34,469) (66,643) (101,112) 77,449 (58,417) 19,032


Accumulated depreciation At 1 January 2008 Business acquisitions Depreciation charge for the year Disposals At 31 December 2008 and

1 January 2009 Depreciation charge for the year Disposals Translation differences

on consolidation At 31 December 2009

At 1 January 2008 Business acquisitions Additions Transfers, net Disposals At 31 December 2008 and

1 January 2009 Business acquisitions Additions Transfers, net Disposals Translation differences

on consolidation At 31 December 2009

Cost

-

50,098 -

- 2,390 - -

- - (19) -

Land

618,829 56,928 36,656 - 712,413 39,940 - - 752,353

- - - - - - - - -

Power plant

74,118

- -

-

(4,168)

-

-

-

-

-

-

(4,045)

919,766

-

-

-

-

-

-

-

-

-

-

-

-

Power plant

- (4,168)

-

875,483

-

-

620,097

-

-

(457)

-

-

-

-

610,279

1,985 45,960,854 4,449,430 6,256,154

-

-

236 3,693,365 1,115,100

1,749 42,267,946 3,334,330 5,645,875

-

235 3,599,738

-

1,514 38,672,376 2,458,847 5,025,778

299,440

181

-

462,766

-

-

969

(3,734)

107,490

4,751

175,716

-

(82,438)

466,723

1,163

-

573,064

-

(15,688)

22,004

9,763

-

556,985

(33,712)

33,641

22,230

11,954

522,872

192,017

441,934

32

(3,630)

248,297

107,155 1,671,115

-

-

9,632

97,523 1,426,416

- (250,667)

9,631

5,086 1,209,411

- (442,332)

-

-

175,716

-

969

- (109,838)

-

38,174 1,002,448 128,217,025

-

(3,914)

5,679 (1,524,052)

2,415 1,304,505 1,322,597

-

33,994 1,221,995 126,827,581

(8,406)

5,059 (21,523,453)

343,536

-

(57,397)

111,847

289,086

-

85,391

-

203,695

450,407

-

(13,843)

47,808

416,442

(30,793)

40,090

10,482

396,663

26,157

-

(2,143)

4,353

23,947

(852)

2,880

5,815

16,104

Total

515,159

32

(77,470)

- 60,019,146

-

-

- 5,880,857

- 54,215,727

- (286,480)

- 5,462,218

-

- 48,524,830

Construc-

tion in progress

(in thousand Baht)

For the years ended 31 December 2009 and 2008

Notes to the financial statements

87,892 1,043,132 -

9,137 5,542,981 5,698,745

6,294

Furniture, Machinery, Oil and fixtures, Trans- equipment liquid office mission and plant chemical equipment facilities equipment tankers and others Vehicles

Total

21,910 17,197,381 120,361,757

Construc-

tion in progress

(in thousand Baht)

Thai Oil Public Company Limited and its Subsidiaries

192,637 3,470,418 2,464,447

-

-

-

-

-

192,637 3,185,226 2,078,999

- (396,046)

-

-

- 1,120,203

Consolidated financial statements

5,365 79,477,058 21,758,674 15,553,311

-

-

-

-

-

5,365 78,561,337 21,758,674 15,553,311

-

570 7,298,289 13,549,196

-

-

192,637 2,161,448 1,616,233

Furniture, Machinery, Oil and fixtures, Trans- equipment liquid office mission and plant chemical equipment facilities equipment tankers and others Vehicles

Consolidated financial statements

4,795 71,193,098 8,209,478 15,553,311

Leasehold Refinery improve- plant and Paraxylene Buildings ments equipment plant

2,625,403 1,056,026

-

-

2,625,422 1,053,636

-

- (125,508)

65,874

-

2,575,324 1,113,270

Land

Leasehold Refinery improve- plant and Paraxylene Buildings ments equipment plant

13 Property, plant and equipment

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Thai Oil Public Company Limited and its Subsidiaries

182 THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

183


303,673

2,228,227

-

-

-

-

Power plant

-

-

- (125,508) - 722,334 - 2,060 - 724,394

50,098 - - 2,621,090 - - (19) 2,621,071

847,842

Buildings

73,037,713

(4,045)

919,766

-

79,121,992

(4,168)

7,034,728

74,118

65,017,314

Refinery plant and equipment

-

-

1,142,041

(3,734)

34,164

-

1,111,611

(51)

173,700

-

937,962

Machinery, equipment and plant equipment

122,657

140,543

-

-

-

-

397,176

397,176

Total

12,017 1,002,448 67,800,703

10,047 1,221,995 72,214,678

-

-

Construc-

tion in progress

298,667

(257)

9,970

4,666

284,288

(27,375)

20,755

25

290,883

Furniture, fixtures, office equipment and others

16,454

(1,519)

2,664

-

15,309

(6,348)

3,124

8,020

10,513

Vehicles

541,124

-

(968,624)

644,109

865,639

-

(7,106,799)

2,703,912

5,268,526

Construction

in progress

78,381,464

(9,574)

-

648,775

77,742,263

(37,942)

-

2,836,173

74,944,032

Total

(in thousand Baht)

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Thai Oil Public Company Limited and its Subsidiaries

85,482 1,799,303 2,120,911

Separate financial statements

3,380 33,516,204 17,309,244 9,297,157

-

-

95,114 1,758,810 1,789,913

-

-

Furniture, Machinery, Oil and fixtures, Trans- equipment liquid office mission and plant chemical equipment facilities equipment tankers and others Vehicles

Consolidated financial statements

3,616 36,293,391 18,424,344 9,907,436

-

-

2,570,992

Land

341,223

2,228,246

At 1 January 2008 Additions Transfers, net Disposals At 31 December 2008 and 1 January 2009 Additions Transfers, net Disposals At 31 December 2009

Cost

At 31 December 2008 At 31 December 2009

-

397,176

Net Book Value

-

397,176

At 31 December 2008 At 31 December 2009

Land

Leasehold Refinery improve- plant and Paraxylene Buildings ments equipment plant

Impairment losses

(in thousand Baht)

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Thai Oil Public Company Limited and its Subsidiaries

184 THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

185


186 34,375,979 541,124 4,972 51,483

37,220,564 4,919 58,962

865,639

397,176 - -

-

397,176 - - -

43,608,309 - 11,482 247,184

(4,610) - (316) (208)

3,488,396 - 1,408 22,066

40,124,523 - 10,390 225,326

(31,563) - - (27,344)

3,398,249 - 650 20,114

36,757,837 9,740 232,556

-

Vehicles Furniture, fixtures, office equipment and others

496,992 30,867,771 2,223,895

189,742

525,344 33,330,457 2,223,914

211,329

Net Book Value At 31 December 2008 At 31 December 2009

- - 397,176

-

- - 397,176

-

Impairment losses At 31 December 2008 At 31 December 2009

645,049 42,169,942 -

534,652

(3,629) (457) -

-

62,411 3,378,864 -

23,647

586,267 38,791,535 -

511,005

(51) (4,168) -

-

68,319 3,285,777 23,389

-

At 1 January 2008 Depreciation charge for the year Disposals At 31 December 2008 and 1 January 2009 Depreciation charge for the year Disposals At 31 December 2009

-

35,509,926 487,616

517,999

Land

Accumulated depreciation

Buildings

Refinery plant and equipment

The gross amounts of the Group’s fully depreciated property, plant and equipment that were still in use as at 31 December 2009, amounted to Baht 1,569 million in the consolidated financial statements (2008: Baht 1,478 million) and amounted to Baht 1,290 million in the separate financial statements (2008: Baht 1,214 million). The subsidiary mortgaged its power plant as collateral for long-term borrowings as described in note 17 to the financial statements. The net book value of the power plant as at 31 December 2009 amounted to Baht 6,618 million (2008: Baht 9,873 million).

Notes to the financial statements For the years ended 31 December 2009 and 2008

14 Intangible assets

Machinery, equipment and plant equipment

Separate financial statements

Thai Oil Public Company Limited and its Subsidiaries

Construction

in progress

Total

(in thousand Baht)

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Thai Oil Public Company Limited and its Subsidiaries

187

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Cost At 1 January 2008 Business acquisitions Additions At 31 December 2008 and 1 January 2009 Additions At 31 December 2009 Accumulated amortisation At 1 January 2008 Business acquisitions Amortisation charge for the year At 31 December 2008 and 1 January 2009 Amortisation charge for the year At 31 December 2009 Net book value At 31 December 2008 At 31 December 2009

(in thousand Baht)

Consolidated financial statements Computer Customer License fee software database Total

573,903 - 594,547 1,168,450 2,501 1,170,951

45,862 603 55,899 102,364 18,679 121,043

- 205,359 - 205,359 - 205,359

619,765 205,962 650,446 1,476,173 21,180 1,497,353

556,951 - 38,535 595,486 60,747 656,233

34,467 603 3,930 39,000 11,963 50,963

- - - - - -

591,418 603 42,465 634,486 72,710 707,196

572,964 514,718

63,364 70,080

205,359 205,359

841,687 790,157


188

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements (in thousand Baht)

Separate financial statements

Computer software

License fee

Cost At 1 January 2008 Additions At 31 December 2008 and 1 January 2009 Additions At 31 December 2009 Accumulated amortisation At 1 January 2008 Amortisation charge for the year At 31 December 2008 and 1 January 2009 Amortisation charge for the year At 31 December 2009 Net book value At 31 December 2008 At 31 December 2009

189

(in thousand Baht) Total

573,064 210,889 783,953 2,509 786,462

37,130 23,957 61,087 15,805 76,892

610,194 234,846 845,040 18,314 863,354

556,660 13,469 570,129 22,289 592,418

26,608 2,998 29,606 5,417 35,023

583,268 16,467 599,735 27,706 627,441

213,824 194,044

31,481 41,869

245,305 235,913

15 Deferred income tax

Deferred tax assets and liabilities determined after appropriate offsetting as at 31 December 2009 and 2008 are included in the balance sheets as follows: (in thousand Baht)

Consolidated financial statements 2009 2008

Separate

financial statements 2009 2008

Deferred tax assets Deferred tax liabilities Net

324,958 (1,329,503) (1,004,545)

319,338 (1,302,371) (983,033)

1,550,132 (1,420,238) 129,894

Movements in deferred tax assets and liabilities during the years 2009 and 2008 were as follows:

1,527,622 (1,386,721) 140,901

Consolidated financial statements Credit / (charged) to:

Deferred tax assets Pension fund Loss carry forward Impairment losses on assets Gain on cross currency and

interest rate swap contracts Other Total Deferred tax liabilities Depreciation Provision for hedging on foreign exchange

and forward contracts Amortisation of transmission

facilities transferred to EGAT Total Net

At

1 January 2009

Statement

of income

(Note 27)

At 31 December 2009

Shareholders’ equity

99,519 1,261,275 119,153

(3,463) (1,182,865) -

- - -

67,395 2,790 1,550,132

(38,613) (233) (1,225,174)

- - -

96,056 78,410 119,153 28,782 2,557 324,958

(1,367,646)

80,564

-

(1,287,082)

(19,075)

3,786

-

(15,289)

(33,517) (1,420,238) 129,894

6,385 90,735 (1,134,439)

- - -

(27,132) (1,329,503) (1,004,545)


190

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

191

Notes to the financial statements (in thousand Baht)

Deferred tax assets Pension fund Loss carry forward Impairment losses on assets Gain on cross currency

and interest rate swap contracts Other Total Deferred tax liabilities Depreciation Provision for hedging on foreign exchange

and forward contracts Amortisation of transmission

facilities transferred to EGAT Total Net

Consolidated financial statements Credit / (charged) to: At 1 January 2008

Statement

of income

(Note 27)

At 31 December 2008

Shareholders’ equity

(in thousand Baht)

87,044 - 119,153

12,475 1,261,275 -

- - -

99,519 1,261,275 119,153

- 3,240 209,437

67,395 (450) 1,340,695

- - -

67,395 2,790 1,550,132

(1,422,218)

54,572

-

(23,175)

4,100

-

(1,367,646) (19,075)

(39,901) (1,485,294) (1,275,857)

6,384 65,056 1,405,751

- - -

(33,517) (1,420,238) 129,894

Deferred tax assets Pension fund Loss carry forward Impairment losses on assets Gain on cross currency

and interest rate swap contracts Other Total Deferred tax liabilities Depreciation Provision for hedging on foreign exchange

and forward contracts Total Net

Separate financial statements Credit / (charged) to: At

1 January 2009

Statement

of income

(Note 27)

At 31 December 2009

Shareholders’ equity

99,519 1,238,765 119,153

(3,463) (1,165,975) -

- - -

96,056 72,790 119,153

67,395 2,790 1,527,622

(38,613) (233) (1,208,284)

- - -

28,782 2,557 319,338

(1,367,646)

80,564

-

(1,287,082)

(19,075) (1,386,721) 140,901

3,786 84,350 (1,123,934)

- - -

(15,289) (1,302,371) (983,033)


192

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements (in thousand Baht)

(in thousand Baht)

Credit / (charged) to:

Deferred tax assets Pension fund Loss carry forward Impairment losses on assets Gain on cross currency

and interest rate swap contracts Other Total Deferred tax liabilities Depreciation Provision for hedging on foreign exchange

and forward contracts Total Net

16 Other non-current assets

Separate financial statements At

1 January 2008

193

Statement

of income

(Note 27)

At 31 December 2008

Shareholders’ equity

87,044 - 119,153

12,475 1,238,765 -

- - -

99,519 1,238,765 119,153

- 3,240 209,437

67,395 (450) 1,318,185

- - -

67,395 2,790 1,527,622

(1,422,218)

54,572

-

(1,367,646)

(23,175) (1,445,393) (1,235,956)

4,100 58,672 1,376,857

- - -

(19,075) (1,386,721) 140,901

Long-term loans to savings

co-operative of employees Goodwill Transmission facilities transferred to EGAT, net Deferred natural gas pipeline facilities,

raw water pipeline and the use of land, net Deferred land lease arrangement

and registration fees, net Other deferred charges, net Refundable deposits and other Total

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

546,153 735,866 90,441

536,087 - 111,721

546,153 - -

536,087 - -

240,061

257,731

120,120

128,910

548,627 861,819 119,856 3,142,823

591,818 869,436 124,005 2,490,798

548,627 747,542 41,261 2,003,703

591,818 782,662 41,205 2,080,682


194

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements

17 Interest-bearing liabilities

Note

Current Short-term borrowings from

financial institutions Unsecured Short-term borrowings from

related companies Current portion of long-term borrowings from financial institutions Secured Unsecured Current portion of unsecured debentures Non-current Long-term borrowings from

financial institutions Secured Unsecured Unsecured debentures Total

5

Consolidated financial statements 2009 2008

(in thousand Baht)

Separate financial statements 2009 2008

1,300,000

7,951,579

1,300,000

7,951,579

- 557,389 1,587,573 - 3,444,962

- 841,311 1,326,883 2,750,000 12,869,773

3,165,671 - 296,350 - 4,762,021

- - - 2,750,000 10,701,579

2,026,281 8,355,673 29,607,517 39,989,471 43,434,433

195

2,648,933 16,248,189 18,300,175 37,197,297 50,067,070

- 5,630,650 29,607,517 35,238,167 40,000,188

- 11,943,480 18,300,175 30,243,655 40,945,234

The periods to maturity of interest-bearing liabilities as at 31 December 2009 and 2008 were as follows:

(in thousand Baht)

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

Within one year After one year but within five years After five years Total

3,444,962 25,006,958 14,982,513 43,434,433

4,762,021 20,255,654 14,982,513 40,000,188

12,869,773 21,035,173 16,162,124 50,067,070

10,701,579 14,772,216 15,471,439 40,945,234

Secured interest-bearing liabilities as at 31 December 2009 and 2008 were secured on the following assets:

Note

Cash at banks-current, savings

and fixed deposits Current investments in fixed

deposits and promissory notes Power plant-carrying value Total

Consolidated financial statements 2009 2008

(in thousand Baht)

Separate financial statements 2009 2008

6

1,266,851

1,682,060

-

-

7

455,115 6,617,606 8,339,572

110,845 9,873,217 11,666,122

- - -

- - -

13

As at 31 December 2009 the Group and the Company had unutilised long-term credit facilities totaling Baht 6,902 million and Baht 6,703 million respectively (2008: Baht 1,925 million and Baht 1,000 million respectively). The currency denomination of interest-bearing liabilities as at 31 December 2009 and 2008 was as follows: (in thousand Baht)

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

Thai Baht United States Dollars Total

28,399,360 15,035,073 43,434,433

28,277,526 11,722,662 40,000,188

22,792,550 27,274,520 50,067,070

18,378,579 22,566,655 40,945,234


196

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements (in thousand Baht)

Interest-bearing liabilities as at 31 December 2009 and 2008 were as follows: (in thousand Baht)

Short-term borrowings from

financial institutions Short-term borrowings from

related companies Long-term borrowings from

financial institutions Debentures Total

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

1,300,000

7,951,579

1,300,000

7,951,579

-

-

3,165,671

-

12,526,916 29,607,517 43,434,433

21,065,316 21,050,175 50,067,070

5,927,000 29,607,517 40,000,188

11,943,480 21,050,175 40,945,234

Long-term borrowings

Details of principal features of the Group’s long-term borrowings as at 31 December 2009 and 2008 were as follows: (in thousand Baht)

The Company : 1) Baht 4,927 million Syndicated Loan Facility agreement at interest 6-month (THBFIX) rate plus a margin, payable in semi-annual installments commencing in September 2010 2) Baht 1,000 million Sub-Syndicated Loan Facility agreement at interest 6-month (THBFIX) rate plus a margin, payable in

semi-annual installments commencing in September 2010 3) U.S. Dollars 200 million Revolving Credit Facility agreement at interest LIBOR plus margin, principal will be repayable in full at the fifth anniversary of the date of the agreement Within the availability period, the Company’s own discretion whether to make a drawdown or repayment as well as decision to select the interest period of the amount drawdown under the relevant terms and conditions under the loan agreement

Consolidated financial statements 2009 2008

4,927,000

1,000,000

-

197

4,927,000

-

7,016,480

Separate financial statements 2009 2008

4,927,000

1,000,000

-

4,927,000

-

7,016,480

Subsidiaries: 1) Baht 1,971 million Credit Facility agreement at interest 6-month (THBFIX) rate plus a margin, payable in semi-annual installments commencing in March 2004 2) Baht 200 million Credit Facility agreement at interest rates ranging from 4.00% - 4.50% per annum, payable in semi-annual installments commencing in December 2010 3) U.S. Dollars 40 million Credit Facility agreement at interest LIBOR plus a margin, payable in semi-annual installments commencing in March 2000 4) Baht 1,000 million Credit Facility agreement at interest MLR less a margin, payable in semi-annual installments commencing in March 2000 5) Baht 920 million Credit Facility agreement at interest MLR less a margin, payable in semi-annual installments commencing in March 2000 6) Baht 371.4 million Credit Facility agreement at interest MLR less a margin, payable in semi-annual installments commencing in March 2000 7) Baht 308.6 million Credit Facility agreement at interest MLR less a margin, payable in monthly installments commencing in December 1999 8) U.S. Dollars 144 million Credit Facility agreement at interest LIBOR plus a margin, payable in semi-annual installments commencing in March 2000 9) Baht 2,625 million Loan Facility agreement at interest MLR less a margin, payable in semi-annual installments commencing in April 2009

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

-

217,850

-

-

1,000

-

-

-

630,116

757,780

-

-

481,052

552,698

-

-

439,787

505,287

-

-

174,167

200,107

-

-

91,500

113,029

-

-

767,049

1,143,493

-

-

2,100,000

2,625,000

-

-


198

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements (in thousand Baht)

10) Baht 1,125 million Revolving Credit Facility agreement at interest MLR less margin, principal will be repayable in full at the seventh anniversary of the date of the agreement. Within the availability period, the subsidiary’s own discretion whether to make a drawdown as well as repayment under the relevant term and conditions under the loan agreement 11) Yen 9,438 million Syndicated Loan agreement at interest 3-month JPY LIBOR plus a margin, payable in semi-annual installments commencing in January 2009 Total

199

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

As at 31 December 2009 the Company and a subsidiary have cross currency swap contracts with the local branches of foreign financial institutions for hedging foreign exchange and interest rate exposure of long-term debts for Baht and Yen currencies, totaling Baht 3,000 million and Yen 9,438 million respectively (2008: Baht 3,000 million and Yen 9,438 million respectively). All counterparties agree to pay the interest and the notional amount according to terms and conditions of the contracts.

18 Trade accounts payable

-

1,915,245 12,526,916

200,000

2,806,592 21,065,316

-

- 5,927,000

-

- 11,943,480

Note

Related parties Other parties Total

5

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

11,163,060 6,945,289 18,108,349

11,704,099 5,288,453 16,992,552

10,562,074 5,055,955 15,618,029

(in thousand Baht)

9,974,026 4,331,847 14,305,873

The currency denomination of trade accounts payable as at 31 December 2009 and 2008 was as follows:

Debentures

(in thousand Baht)

In 2008 the Company issued four-year-term debentures to institutional investors and/or major investors, totaling Baht 3,000 million, at face value of Baht 1,000 each, maturing on 5 June 2012 and bearing interest at the rate of 4.74% per annum, which will be repayable on every 5 June and 5 December in arrears. In 2009 the Company issued five-year-term debentures to general and institutional investors, totaling Baht 12,000 million, at face value of Baht 1,000 each, maturing on 13 February 2014 and bearing interest at the rate of 4.20% per annum for the first and second year, of 5.30% per annum for the third and fourth year and of 6.0% per annum for the fifth year, which will be repayable on every 13 February, 13 May, 13 August and 13 November in arrears. Details of the Company’s debentures as at 31 December 2009 and 2008 were as follows: (in thousand Baht)

Consolidated financial statements 2009 2008

Separate financial statements 2009 2208

Debentures Less discount on debentures Total

29,615,734 (8,217) 29,607,517

29,615,734 (8,217) 29,607,517

21,060,126 (9,951) 21,050,175

21,060,126 (9,951) 21,050,175

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

Thai Baht United States Dollars Other Total

12,681,412 5,414,317 12,620 18,108,349

11,825,671 5,166,881 - 16,992,552

11,359,126 4,258,903 - 15,618,029

10,075,235 4,230,638 - 14,305,873


200

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements

19 Other current liabilities (in thousand Baht)

Consolidated financial statements 2009 2008

Accrued operating expenses Oil Fuel Fund payable Other payables Value added tax payable Other Total

215,778 179,554 864,982 40,410 237,639 1,538,363

189,953 316,942 409,483 52,010 425,595 1,393,983

Separate financial statements 2009 2008

132,547 179,554 805,325 - 266,869 1,384,295

100,785 316,942 344,696 - 355,511 1,117,934

21 Additional paid-in capital and reserves Share premium

Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account (“share premium”). Share premium is not available for dividend distribution.

Legal reserve

Section 116 of the Public Companies Act B.E. 2535 requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward (if any), to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.

22 Segment information

20 Share capital

(thousand shares / thousand Baht)

2009

Par value per share (in Baht) Number of shares

Authorised At 1 January - Ordinary shares At 31 December - Ordinary shares Issued and paid-up At 1 January - Ordinary shares At 31 December - Ordinary shares

201

2008 Amount Number of shares

Amount

10

2,040,028

20,400,279

2,040,028

20,400,279

10

2,040,028

20,400,279

2,040,028

20,400,279

10

2,040,028

20,400,279

2,040,028

20,400,279

10

2,040,028

20,400,279

2,040,028

20,400,279

Segment information is presented in respect of the Group’s business segments. The primary format, business segments, is based on the Group’s management and internal reporting structure. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Business segments

The Group comprises the following main business segments: Segment 1 Oil refinery Segment 2 Lube base oil refinery Segment 3 Petrochemical Segment 4 Power generation Segment 5 Oil and chemical products transportation services Segment 6 Other


Profit (loss) before finance costs and income tax expense (income) Finance costs Profit (loss) before income tax expense (income) Income tax expense (income) Profit (loss) for the year Attributable to : Equity holders of the Company Minority interest Profit (loss) for the year

Revenue from sale of goods and rendering of services Net foreign exchange gain Other income Total revenues Cost of sale of goods and rendering of services Selling expenses Administrative expenses Management benefit expenses Net derivative loss on hedging Net foreign exchange loss Total expenses Share of loss of associates

Business segment results

3

802

-

-

- 1,006

- 9,086 (1,536)

-

1,006

9,086 (1,536)

1,006

9,086 (1,536)

432

1,124 (1,377)

1,438

10,210 (2,913)

-

1,702

1,873

1,438

12,083 (1,211)

-

1,048

-

1,048

1,048

447

1,495

-

1,495

2008

2009

2008

2009

-

Lube base oil refinery

-

(10)

Oil refinery

-

-

-

19

-

52

-

22

68

-

-

-

30

59

-

-

23

58

-

-

8

73

-

-

-

7,276

28

7,248

7,276

86

7,362

210

7,572

2009

1,960

-

1,960

1,960

(20)

1,940

231

2,171

2008

811

250

561

811

350

1,161

110

1,271

2009

740

250

490

740

163

903

233

1,136

2008

26

-

26

26

12

38

74

112

2009

2009

2008

1,695

1,575

2,275

-

-

-

10

(111)

(448)

-

-

7

(63)

(242)

-

361

278

937

201

898

3,825

303

708

109

-

(27)

(2)

(27)

(2)

1 (72,864) (91,939) 270,792 399,508

-

-

-

1

-

- (72,315) (91,641) 269,015 393,665

Thai Oil Public Company Limited and its Subsidiaries

-

20

-

-

5

3

-

12

2008

- (78,744) (93,752) 287,393 401,400

- (6,972) (2,986)

- -

-

- 25

2009

Total

- (71,772) (90,766) 284,123 399,125

2008

Eliminations

-

25

2009

Other

49

-

49

49

1

50

65

115

2008

5

-

5

5

-

5

-

5

2009

Other

2009

2008

2009

Total

(152)

(114)

2,115

-

-

2,004

115

85

393 (1) (5,755) (1,701) 12,455

-

(1) (5,870) (1,786) 12,062

(1) (5,755) (1,701) 12,455

-

(1) (5,755) (1,701) 14,459

-

(1) (5,907) (1,815) 16,574

2008

Eliminations

559

335

224

559

(786)

(227)

2,117

1,890

2008

(in million Baht)

For the years ended 31 December 2009 and 2008

Notes to the financial statements

-

885

-

-

5

57

-

823

1,000

16

-

984

2008

Oil and chemical products transportation Petrochemical Power generation services

-

-

-

33

203

119

869

3,825

361

18

157

212

271,858 405,684 15,697 20,877 42,139 50,720 13,073 13,280

227

174

153

58

-

430

557

54

54

174

383

41

-

788

285

72

270,383 400,226 15,472 20,653 41,691 50,459 12,984 13,145

329

- 981

159

17

283,941 404,473 17,135 22,372 49,711 52,891 14,344 14,416

151

- 10

4,738

8,136

3 63

-

1,480

968

2009

274,325 399,735 16,981 22,213 49,365 52,606 14,231 14,353

2008

2009

2009

2008

2008

2009

2009

2008

Lube base oil refinery

Oil refinery

Oil and chemical products transportation Petrochemical Power generation services

(in million Baht)

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Thai Oil Public Company Limited and its Subsidiaries

202 THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

203


Oil refinery 2009 2008 Trade accounts receivable 17,583 12,077 Inventories 24,546 17,770 Other current assets 15,093 15,908 Investments in associates 8,343 8,327 Property, plant and equipment 34,376 37,221 Other non-current assets 3,571 4,768 Total assets 103,512 96,071 Trade accounts payable 16,993 14,306 Other current liabilities 6,903 11,981 Long-term borrowings

from financial institutions 5,631 11,943 Debentures 29,608 18,300 Other non-current liabilities 1,900 1,959 Total liabilities 61,035 58,489

Business segment financial position

1,929

31

-

-

510

1,388

9,208

69

3,130

-

2,269

2,750

990

2009

1 2,438 50 1,736 - - - 1,786

6 2,430 89 1,664 - - - 1,753

7,874 29,704 25,877 15,160 15,932

- 8,859

2,724 - 33

- - 31 923 10,373

-

4,305

2,944

3,855

323

1,610

3,761

569

700 2,043 1,021 2,649 - 33 5,746

1,662 770 2,027 - 27 4,486

371

410

1,414

2,100

2,147

3,446 18,797 19,791 10,021 10,409 89

-

-

-

-

-

-

-

2,234

132

1,923

2,346

90

2,878

1,830

189

94

629

202

70

1,395

1,889

2,690

2,220

111

2,834

117

5,220

620

2008

2009

2008

2008

2009

2009

2008

Lube base oil refinery

Oil and chemical products transportation Petrochemical Power generation services

8

-

-

-

2

6

243

-

-

203

24

-

16

2009

Other

2009

2008

2009

Total 2008

(26)

(26) 28,937 20,545

(160)

(670)

229 (170)

5,271

5,798

(752) 67,801 72,215

202

(221)

-

-

(232)

1,770

1,791

- 29,608 18,300

- 10,382 18,897

6,190 14,655

14 (13,526) (6,556) 66,058 69,261

-

-

-

14 (7,514) (3,364)

- (5,791) (2,960) 18,108 15,618

25 (22,512) (15,376) 137,745 132,841

-

-

- (8,344) (8,098)

25 (7,357) (3,235) 15,343 18,817

-

- (5,955) (3,095) 20,191 15,237

2008

Eliminations

(in million Baht)

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Thai Oil Public Company Limited and its Subsidiaries

204 THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Interest income Land lease income Service income Dividend income Reversal of allowance for

impairment losses on investments Euro IV compensation income Other Total

Advisory and legal fees Personnel expenses Depreciation Other Total 46,661 337,160 71,027 482,301 937,149

205

Thai Oil Public Company Limited and its Subsidiaries

Notes to the financial statements

For the years ended 31 December 2009 and 2008

23 Other income (in thousand Baht)

Consolidated

financial statements 2009 2008

Consolidated

financial statements 2009 2008

39,139 270,587 52,572 345,688 707,986

Separate

financial statements 2009 2008

120,400 9,610 65,262 - 196,709 9,610 38,522 - 199,919 58,005 739,803 5,804,912 204,271 54,555 765,476 1,761,388

- 1,127,773 372,203 1,695,248 779,497 987,070 263,534 2,274,942 - 1,127,773 206,177 8,136,589 779,497 987,070 186,182 4,738,439

During 2008 the Company reversed allowance for impairment losses on investments in an other related company (Thai Petroleum Pipeline Co., Ltd.), amounting to Baht 779 million, due to the related company’s operation reported net profit and increase in cash flows from operating activities, then the recoverable amount exceeds the carrying amount of the investment.

24 Administrative expenses (in thousand Baht)

Separate

financial statements 2009 2008

22,550 229,388 13,606 291,774 557,318 15,882 159,846 13,073 241,349 430,150


206

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements

25 Employee benefit expenses

26 Finance costs (in thousand Baht)

Management Salaries and wages Contributions to provident fund Retirement gratuity fund Other Other employees Salaries and wages Contributions to provident fund Retirement gratuity fund Other Total

207

Consolidated

financial statements 2009 2008

164,782 14,669 12,575 86,719 278,745 1,409,026 98,938 71,902 226,133 1,805,999 2,084,744

163,358 13,201 26,759 99,576 302,894 1,234,897 92,982 126,904 148,125 1,602,908 1,905,802

Separate

financial statements 2009 2008

107,731 10,093 10,704 46,122 174,650 1,091,060 86,366 71,641 203,305 1,452,372 1,627,022

123,673 10,633 24,254 68,402 226,962 952,984 80,831 129,409 127,007 1,290,231 1,517,193

The Group established a contributory registered provident fund to which the employees contribute monthly at rates ranging from 3% to 15% of their basic salaries and by the Group at rates ranging from 3% to 15% of the employees’ basic salaries. Membership to the funds is on a voluntary basis. The provident funds are registered with the Ministry of Finance as juristic entities and are managed by a licensed Fund Manager. The Company has a retirement gratuity fund plan to provide retirement and gratuity benefits to all of its employees. Benefits are payable upon retirement, disability, death or resignation. Provisions are computed on the benefit formula assuming all employees are terminated at the reporting date.

(in thousand Baht)

Consolidated

financial statements 2009 2008

Interest expense:

Financial institutions and other Financial expenses Capitalised as cost of assets

under construction Net

27 Income tax expense (income)

Note

Current tax expense Current year Deferred tax expense Movements in temporary differences Total

15

Separate

financial statements 2009 2008

2,057,799 56,925 2,114,724

2,138,822 63,393 2,202,215

1,824,803 47,957 1,872,760

1,655,259 47,345 1,702,604

- 2,114,724

(85,814) 2,116,401

- 1,872,760

- 1,702,604

Consolidated

financial statements 2009 2008

870,310 1,134,439 2,004,749

619,913 (1,405,751) (785,838)

(in thousand Baht)

Separate

financial statements 2009 2008

- 1,123,934 1,123,934

- (1,376,857) (1,376,857)

Reconciliation of effective tax rate (in thousand Baht)

Consolidated

financial statements 2009 2008

Separate

financial statements 2009 2008

Profit (loss) before income tax expense (income) Income tax using the Thai corporation tax rate Income tax reduction Income not subject to tax Expenses not deductible for tax purposes Utilisation of previously unrecognised tax losses Total

14,459,517 4,337,855 (510,506) (1,535,842) 17,333 (304,091) 2,004,749

10,210,112 3,063,034 (510,506) (1,440,669) 12,075 - 1,123,934

(226,486) (67,945) 145,658 (786,717) 16,258 (93,092) (785,838)

(2,913,169) (873,951) 145,658 (656,030) 7,466 - (1,376,857)


208

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements Income tax reduction

Royal Decree No. 387 B.E. 2544 dated 5 September 2001 grants companies listed on the Stock Exchange of Thailand a reduction in the corporate income tax rate from 30% to 25% for taxable profit not exceeding Baht 300 million for the five consecutive accounting periods beginning on or after enactment. Listed companies that received income tax reduction under this Royal Decree are also eligible to continue the period of tax reduction under Royal Decree No. 475 but not beyond the 2010 accounting period ending on or after 31 December 2010. Royal Decree No. 475 B.E. 2551 grants companies listed on the Stock Exchange of Thailand a reduction in the corporate income tax rate from 30% to 25% for taxable profit not exceeding Baht 300 million for the three consecutive accounting periods beginning on or after 1 January 2008. The Company has, accordingly, calculated income tax on its taxable profit for the years ended 31 December 2009 and 2008 at the 25% corporate income tax rate. However, its subsidiaries have calculated income tax on their taxable profit for those years at the 30% corporate tax rate.

Notes to the financial statements Summary of revenue from promoted and non-promoted businesses:

(in thousand Baht)

Consolidated financial statements 2009

Export sales Local sales Eliminations Total revenues

Promoted businesses

13,350,419 26,354,100

39,993,563 278,391,716

Total

53,343,982 304,745,816 (73,966,762) 284,123,036

Promoted businesses

Non-promoted businesses

10,104,051 46,446,819

54,805,744 378,614,580

Total

64,909,795 425,061,399 (90,846,430) 399,124,764 (in thousand Baht)

Separate financial statements 2009

Export sales Local sales Total revenues

2008

Non-promoted businesses

28 Promotional privileges

By virtue of the provisions of the Industrial Investment Promotion Act of B.E. 2520, the Company and certain local subsidiaries have been granted privileges by the Board of Investment relating to power generation, petrochemical product production, petroleum and liquid chemical products transported by marine, offshore crude oil unloading facilities and industrial zone. The privileges granted include: a) an exemption from payment of import duty and tax on machinery and equipment as approved by the Board of Investment. b) an exemption from payment of corporate income tax for promoted operations for periods of 7 to 8 years from the dates on which the income is first derived from such operations, and c) a 50% reduction in the normal corporate income tax rate on the net profit derived from certain promotional operations for a period of five years, commencing from the expiry date in (b) above As promoted companies, the Company and its subsidiaries must comply with certain conditions and restrictions provided for in the promotional certificates.

209

Promoted businesses

2008

Non-promoted businesses

- -

Total

Promoted businesses

37,360,861 37,360,861 236,964,004 236,964,004 274,324,865

Non-promoted businesses

- -

Total

50,028,246 50,028,246 349,707,098 349,707,098 399,735,344

29 Basic earnings (loss) per share

The calculations of basic earnings (loss) per share for the years ended 31 December 2009 and 2008 were based on the profit (loss) for the years attributable to equity holders of the Company and the number of ordinary shares outstanding during the years as follows: (in thousand Baht / thousand shares)

Profit (loss) for the year attributable

to equity holders of the Company Number of ordinary shares outstanding Basic earnings (loss) per share (in Baht)

Consolidated

financial statements 2009 2008

12,061,538 2,040,028 5.91

223,570 2,040,028 0.11

Separate

financial statements 2009 2008

9,086,178 2,040,028 4.45

(1,536,313) 2,040,028 (0.75)


210

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements 30 Dividends

At the meeting of the Board of Directors of the Company held on 20 August 2009, the Company’s Board of Directors approved the appropriation of interim dividends for the six-month period ended 30 June 2009 at Baht 1.05 per share, totaling Baht 2,142 million. The interim dividends were paid to the Company’s shareholders in September 2009. At the annual general meeting of the shareholders of the Company held on 3 April 2009, the Company’s shareholders approved the appropriation of 2008 annual dividends at Baht 2.75 per share, totaling Baht 5,610 million. After a deduction of the interim dividends of Baht 1.75 per share which were already paid to the Company’s shareholders in September 2008, the remaining dividends of Baht 1 per share, totaling Baht 2,040 million, were paid to the Company’s shareholders in April 2009. At the meeting of the Board of Directors of the Company held on 24 August 2008, the Company’s Board of Directors approved the appropriation of interim dividends for the six-month period ended 30 June 2008 at Baht 1.75 per share, totaling Baht 3,570 million. The interim dividends were paid to the Company’s shareholders in September 2008. At the annual general meeting of the shareholders of the Company held on 4 April 2008, the Company’s shareholders approved the appropriation of 2007 annual dividends at Baht 4.50 per share, totaling Baht 9,180 million. After a deduction of the interim dividends of Baht 1.75 per share which were already paid to the Company’s shareholders in October 2007, the remaining dividends of Baht 2.75 per share, totaling Baht 5,610 million, were paid to the Company’s shareholders in April 2008.

31 Financial instruments

Financial risk management policies

The Group is exposed to normal business risks from changes in market interest rates and currency exchange rates and from non-performance of contractual obligations by counterparties. The Group does not hold or issue derivative financial instruments for speculative or trading purposes. Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved.

211

Notes to the financial statements Interest rate risk

Interest rate risk is the risk that future movements in market interest rates will affect the results of the Group’s operations and its cash flows. Hence, the Group has hedging agreements with various investment-grade financial institutions to protect against the risk of rising interest rates. The effective interest rates of loans as at 31 December 2009 and 2008 and the periods in which those assets mature were as follows:

(in thousand Baht)

2009 Non-current Long-term loans to savings co-operative

of employees Loans to employees Total 2008 Non-current Long-term loans to savings co-operative

of employees Loans to employees Total

Consolidated financial statements Effective interest rate Within 1 year After 1 year

Total

(% per annum)

MLR less

margin 3.50 - 4.25 MLR less

margin 4.25 - 4.75

39,030 808 39,838

546,153 8,152 554,305

585,183 8,960 594,143

37,636 771 38,407

536,087 9,608 545,695

573,723 10,379 584,102


212

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements

Notes to the financial statements (in thousand Baht)

Seperate financial statements

2009 Current Short-term loans to subsidiaries

Non-current Long-term loans to savings

co-operative of employees Total 2008 Current Short-term loans to subsidiaries

Non-current Long-term loans to savings

co-operative of employees Total

213

Effective

interest rate

Within 1 year After 1 year

(% per annum)

MMR rate not exceeding the average MLR of 5 banks less margin

Total

Foreign currency risk

The Group is exposed to foreign currency risk relating to purchases of raw materials and long-term borrowings which are denominated in foreign currencies. However, the Group enters into short-term currency hedging contracts for short term foreign currency exposures when appropriate. As at 31 December 2009 and 2008 the Group was exposed to foreign currency risk in respect of financial assets and liabilities denominated in the following currencies: (in thousand Baht)

MLR less margin MMR rate not exceeding the average MLR of 5 banks less margin MLR less margin

4,007,500

-

4,007,500

39,030 4,046,530

546,153 546,153

585,183 4,592,683

3,159,000

-

3,159,000

37,636 3,196,636

536,087 536,087

573,723 3,732,723

The effective interest rates of borrowings from financial institutions and debentures as at 31 December 2009 and 2008 and the periods in which those liabilities mature were disclosed in note 17 to the financial statements.

Note

U.S. Dollars Cash and cash equivalents Trade accounts receivable Other receivables Interest-bearing liabilities Trade accounts payable Other payables Other currencies Cash and cash equivalents Trade accounts receivable Trade accounts payable Other payables Net balance sheet exposure

6 8 17 18 6 8 18

Consolidated financial statements 2009 2008

642,934 4,587,994 23,115 (15,035,073) (5,414,317) (33,919) (15,229,266) 91,829 168,805 (12,620) (24,656) 223,358 (15,005,908)

402,023 3,749,406 467 (27,274,520) (4,258,903) (2,455) (27,383,982) 91 - - (7,147) (7,056) (27,391,038)

Separate

financial statements 2009 2008

2,135 3,319,151 4,779 (11,722,662) (5,166,881) (19,483) (13,582,961) 118 - - (22,143) (22,025) (13,604,986)

2,246 2,920,603 - (22,566,655) (4,230,638) (1,979) (23,876,423) - - - (7,147) (7,147) (23,883,570)


214

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements Credit risk

Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Group as and when they fall due. The Group has no significant credit risk with any single counterparty or group of counterparties since the Group maintains business with large customers in petroleum and power industries and requires full first class collateral for the rest.

Liquidity risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows.

Fair values

The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. The following methods and assumptions are used by the Group to estimate the fair value of each class of financial instrument. The fair value of cash and cash equivalents, trade and other short-term receivables is taken to approximate the carrying value due to the relatively short-term maturity of these financial instruments. The fair values of investments in equity securities, which are available for sales, are determined by reference to their net asset value at the reporting date. The fair value of bank overdrafts and short-term borrowings from financial institutions and trade accounts payable and others, are taken to approximate their fair values due to the relatively short-term maturity of these financial instruments. The fair value of long-term loans and long-term borrowings carrying a floating rate, which is considered to be market rate, are taken to approximate their fair values. The fair value of non-derivative financial liabilities, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date or based on market price, if available.

215

Notes to the financial statements Fair values of debentures, together with the carrying values shown in the balance sheets as at 31 December 2009 and 2008 were as follows: (in thousand Baht)

2009 Non-current Debentures Total 2008 Current Debentures Non-current Debentures Total

Consolidated financial statements Fair value

Carrying value

Separate

financial statements Fair value

(30,478,518) (30,478,518)

(29,607,517) (29,607,517)

(30,478,518) (30,478,518)

(29,607,517) (29,607,517)

(2,790,136)

(2,750,000)

(2,790,136)

(2,750,000)

(16,548,965) (19,339,101)

(18,300,175) (21,050,175)

(16,548,965) (19,339,101)

(18,300,175) (21,050,175)

32 Commitments with non-related parties

Capital commitments Project construction agreements Total Non-cancellable operating lease

commitments Within one year After one year but within five years After five years Total Other commitments Technical services agreements Inventory management services agreements Letters of guarantee issued by

financial institutions Crude oil purchase agreements Total

Carrying value

(in thousand Baht)

Consolidated financial statements 2009 2008

Separate

financial statements 2009 2008

1,054,232 1,054,232

734,607 734,607

683,088 683,088

541,711 541,711

177,867 755,060 1,747,341 2,680,268

175,270 735,252 1,899,269 2,809,791

174,426 751,467 1,743,543 2,669,436

174,426 731,876 1,894,206 2,800,508

364,500 44,689

501,381 70,165

364,500 -

501,381 -

4,763,961 37,016,854 42,190,004

411,852 37,828,584 38,811,982

4,547,015 37,016,854 41,928,369

196,495 37,828,584 38,526,460


216

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT FINANCIAL STATEMENTS

Thai Oil Public Company Limited and its Subsidiaries

Thai Oil Public Company Limited and its Subsidiaries

For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008

Notes to the financial statements Long-Term Maintenance Agreements

A subsidiary has combustion turbine supply and maintenance agreements with local companies (“service providers”), whereby the service providers will supply and repair parts used for yearly and scheduled repairs. In this regard, the subsidiary is committed to pay for the parts and maintenance service fees at the prices specified in the agreements. These agreements are effective on the agreement date till the second major scheduled repair or the twelfth yearly scheduled repair.

33 Contingent liabilities and contingent assets

As at 31 December 2009 the Group had the following contingent liabilities and contingent assets: a) The Company has outstanding interest rate swap contracts with local branches of foreign financial institutions to protect interest rate risk of the U.S. Dollar and Baht long-term financial liabilities of U.S. Dollars 60 million and Baht 2,750 million (31 December 2008: U.S. Dollars 60 million). According to terms and conditions of the contracts, the Company and the counterparty bank agree to pay the interest rate differentials for the notional amount. b) A subsidiary has been assessed by the Excise Department for the excise tax including penalty and surcharge for certain shipments of imported reduced crude oil totaling Baht 253.7 million (the Central Tax Court ruled in favor of the subsidiary). As at 31 December 2009 the case was in the process of consideration of the Supreme Court. c) A subsidiary has been assessed by the Revenue Department for the corporate income tax in respect to 1999 and 2000 revenues resulting to the utilisation of tax loss carry forwards in subsequent years (the Central Tax Court ruled in favor of the subsidiary). As at 31 December 2009 the case was in the process of consideration of the Supreme Court. d) The Company has crack spread swap and time spread swap with foreign companies (“counterparties”). The Company has or the counterparties have commitments to make payments for the differences between the fixed price and floating price for each period. As at 31 December 2009 the Company had oil volume under the agreements totaling 5.12 million barrels (31 December 2008: nil).

34 Insurance policy

As at 31 December 2009 the Group has an All Risks and Loss of Profit Insurance Policy (“ALOP”) from a syndicate of insurers and reinsurers for a total insured value of U.S. Dollars 6,453 million (2008: U.S. Dollars 7,113 million). Such policy is renewed on an annual basis. Certain subsidiaries have assigned their rights to proceeds from insurance claims under the ALOP to the lenders under certain loan agreements.

217

Notes to the financial statements 35 Event after the reporting period

At the meeting of the Board of Directors of the Company held on 19 February 2010, the Company’s Board of Directors approved the submission for approval at the annual general meeting of the shareholders of the Company the appropriation of 2009 annual dividends at Baht 2.55 per share, totaling Baht 5,202 million. After a deduction of the interim dividends of Baht 1.05 per share which were already paid to the Company’s shareholders in September 2009, the remaining dividends of Baht 1.50 per share, totaling Baht 3,060 million, scheduled for payment on 28 April 2010. This dividend is subject to the approval of the Company’s shareholders at the annual general meeting to be held on

2 April 2010.

36 Thai Accounting Standards not yet adopted

The Company and local subsidiaries have not adopted the following new and revised Thai Accounting Standards (“TAS”) that have been issued as of the reporting date but are not yet effective. The new and revised TAS which is relevant to the operations of the Company and the subsidiaries are anticipated to become effective for annual financial periods beginning on or after 1 January in the year indicated. TAS

TAS 24 (revised 2007) TAS 40

Topic

Related Party Disclosures Investment Property

Year effective

2011 2011

Management is presently considering the potential impact of adopting and initial application of these new and revised TAS on the consolidated and separate financial statements.


218

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT AUDIT FEES OF THE AUDITORS

Thai Oil Public Company Limited and its Subsidiaries

Audit Fees of the Auditors 2009

Notes to the financial statements

219

For the years ended 31 December 2009 and 2008

37 Reclassification of accounts

1. Audit Fees

Certain accounts in the 2008 financial statements have been reclassified to conform to the presentation in the 2009 financial statements as follows:

Balance sheets as at 31 December 2008

(in million Baht)

Consolidated financial statements

Before reclassi fication

Accounts receivable from subsidiary, associates and related parties Other current assets Investments in subsidiaries

and associates Investments in subsidiaries Investments in associates Accounts payable to subsidiary, associates and related parties Other current liabilities

Reclassification

Before reclassification

Reclassification

(83) 83

- 2,060

149 1,135

(149) 149

- 1,284

229 - -

(229) - 229

- - 229

8,327 - -

(8,327) 8,094 233

- 8,094 233

52 1,342

(52) 52 -

- 1,394

48 1,070

(48) 48 -

- 1,118 (in million Baht)

Consolidated financial statements

Before reclassi fication

Cost of sale of goods and

rendering of services Selling and administrative expenses Selling expenses Administrative expenses Management benefit expenses

After reclassification

83 1,977

Statements of income for the year ended 31 December 2008

2. Non-Audit Fees

Separate financial statements

After reclassification

393,772 1,012 - - -

Reclassification

(107) (1,012) 108 708 303 -

After reclassification

393,665 - 108 708 303

Separate financial statements Before reclassification

400,449 608 - - -

Reclassification

(223) (608) 174 430 227 -

The Company, subsidiaries and Thaioil Group Registered Provident Fund paid for the audit fees to the audits’ company for the latest account period amounting to Baht 5,538,000 (Five million five hundred and thirty eight thousand baht only)

After reclassification

400,226 - 174 430 227

The reclassifications have been made to comply with the classification set out in the Pronouncement of the Department of Business Development “Determination of items in the financial statements B.E. 2552” dated 30 January 2009.

The Company and subsidiaries paid for non-audit fees for monitoring the performance compliance with the condition of the BOI Promotion Certificate to the audit’s company for the latest account period amounting Baht 425,000

(Four hundred and twenty five thousand baht only)


220

THAI OIL PUBLIC COMPANY LIMITED 2009 ANNUAL REPORT ABBREVIATIONS AND ACRONYMS

Abbreviations And Acronyms Unless otherwise stated, abbreviations and terms used in this annual report shall have the following meaning: AGM Bangchak Petroleum bpd CDU CG COSO CSR - DIW DWT EBITDA

EIA GDP GRM IPP IPT IRPC ISO KBD KM KPIs Maesod Clean Energy / MCE MPU PDU PMS PTT PTTAR PTT International Trading QSHE RMIS RMSC Sak Chaisidhi / SAKC SBM

Annual General Meeting of Shareholders Bangchak Petroleum Public Company Limited barrels per day Crude Distillation Unit Corporate Governance The Committee of Sponsoring Organizations of the Treadway Commission Corporate Social Responsibility / Department of Industrial Works Deadweight tons Earnings Before Interest, Taxes, Depreciation and Amortization Environmental Impact Assessment Gross Domestic Product Gross Refinery Margin Independent Power Producer Independent Power (Thailand) Company Limited IRPC Public Company Limited International Organization for Standardization thousand barrels per day Knowledge Management Key Performance Indicators Maesod Clean Energy Company Limited Methyl Pyrolidone Unit Propane De-Asphalting Unit Performance Management System PTT Public Company Limited PTT Aromatics and Refining Public Company Limited PTT International Trading Private Limited Quality, Safety, Health and Environment Risk Management Information Systems Risk Management Steering Committee Sak Chaisidhi Company Limited Single Buoy Mooring

SDU SC SEC SET SGS SGSi SPP TDAE Thaioil Energy Solutions / TES Thaioil Ethanol / TET Thai Paraxylene / TPX Thaioil Power / TP Thaioil Solvent Thappline Thai Lube Base / TLB TOP / Thaioil / the Company TOP Solvent / TS USD VDU

Solvent Dewaxing Unit SC Carrier Company Limited The Securities and Exchange Commission The Stock Exchange of Thailand Shell Global Solutions Shell Global Solutions International Small Power Producer Treated Distillate Aromatic Extract Thaioil Energy Solutions Company Limited Thaioil Ethanol Company Limited Thai Paraxylene Company Limited Thaioil Power Company Limited Thaioil Solvent Company Limited Thai Petroleum Pipeline Company Limited Thai Lube Base Public Company Limited Thai Oil Public Company Limited TOP Solvent Company Limited US Dollar Vacuum Distillation Unit

221



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