Reports to the Stock Exchange

enable the business to lower its cost structure and serve customers more efficiently. The move is expected to be completed by the end of 2012. On-going projects under implementation In August 2011, investment in production of recycled polyester fibers and yarns with capacity of 28,500 tons per annum. Under the project, discarded, or "post consumer," PET bottles will be collected and recycled to produce high quality resin for making containers for consumer drinks; yarns for premium garments of environmentally-conscious brands and colored fibers for automotive and non-woven end applications. Indorama Ventures has launched the ECORAMA brand for its recycled Polyester Fibres and Yarns products and has recently been awarded a Green Label certificate by the Thailand Environment Institute. The project will be located in Nakhon Pathom in Thailand at the site of our existing facility Indorama Polyester Industries, Nakhon Pathom, Thailand. The total investment will be around US$ 22.4 million. The project is targeted to commence operations by the first quarter of 2013. In August 2011, investment in bi-component fibers project for Hygiene Applications with capacity of 16,000 tons per annum. The company is highly active in the non-woven materials market and has recently acquired bi-component fiber capacity in Europe through Trevira, that is targeted mainly at the hygiene sector. Hygiene products utilize high technology that requires top class manufacturing and close ties with customers to be able to provide the exacting specifications required for products that remain in close touch with the skin such as baby diapers, feminine hygiene, etc. The new project will produce one of the key components of such applications by tying up technologically with Japan's Toyobo, well-known company in this field, to make bi-component fibers for hygiene end-use. The project will be located in Rayong, Thailand. The total investment will be around US$ 21.2 million. The project is targeted to commence operations by the second quarter of 2012 In August 2011, investment in high quality bi-component yarns, FINNE, at its recently acquired IVI plant (formerly SK Keris) in Tangerang, Indonesia, with capacity of 16,000 tons per annum. IVI owns unique technology to make Bi-component yarns (known as FINNE) through a single step process. The company enjoys significant competitive advantage over companies who currently use a two step process and has secured a leading market share in this segment. The product is very popular for outerwear and has unique properties of drape and touch which few competitors can offer, giving it a good potential for growth. The total investment will be around US$ 38.0 million. The project is targeted to commence operations by the first quarter of 2013 In May 2011, IVL board approved a Brownfield expansion of PTA production at the site of its existing plant, owned and operated by its subsidiary Indorama Holdings Rotterdam BV. It will add a new production line with an annual capacity of PTA of 250,000 tons per annum thus bringing the total capacity at the site to 600,000 tons per annum. This expansion, which is expected to be completed in 2013 will be cost competitive and enhance integration with key raw material for production of PET polymers in Europe. IVL's total capacity of PTA in Europe will increase to 811,000 tons per annum. In April 2011, IVL announced the location of the Brownfield expansion of PET polymers production in Europe with a capacity 220,000 tons per annum. The aforesaid expansion will be at the existing site of our PET polymer plant in Poland under Indorama Polymers Poland S.p.z.o.o. The expansion will benefit from economies of scale on our existing site for PET facility and benefit from piped supply of PTA as co-located with an existing third party PTA supplier. This expansion, which is expected to be completed by end of 2013 will be cost competitive and take total capacity in Poland to 370,000 tons per year and IVL's total capacity in Europe for PET Polymers to 1.4 million tons per annum. In March 2011, IVL announced to set up a new 313,000 tons per annum Continuous Polymerization resin Plant at Purwakarta, Indonesia. The output from this plant will cater to the growing demand of the Polyester Fiber, Yarn and Chips market in Indonesia and Asian region. PT Indorama Polychem Indonesia, a new wholly owned subsidiary, has been incorporated in Indonesia to implement the greenfield expansion. The plant is expected to commercially start operation in Q2, 2013 In August 2010, the IVL approved implementation of a new PET plant by its subsidiary Indorama Polymers PCL "IRP". IRP through a new wholly owned subsidiary will be setting up a 75,000 tons per annum solid state polymerization "SSP" plant to produce PET at Port Harcourt, Nigeria. This is the first PET investment of IVL in Africa and thus establishing its foothold in the 450,000 tons per annum market. Currently, there is only one producer of PET in Africa. The plant is expected to complete and start commercial operations in April, 2012. It is expected to be value accretive to earnings. In May 2010, the IVL approved expansion of PET production at the site of its existing plant, owned and operated by its subsidiary Indorama Polymers Rotterdam BV. It will add a new production line with an annual capacity of PET resin of 190,000 tons thus bringing the total capacity at the site to 390,000 tons. The expansion is expected to be completed and start operations in the middle of , 2012. The new plant will generate employment. The proposed expansion is being taken up to increase market share in Europe, to integrate with the PTA capacity at Rotterdam and utilities at the same location and benefit from economies of scale. It is expected to be value accretive to earnings. On completion of all the announced acquisitions and expansions, IVL will have an increasingly advantaged portfolio of regional business with a total capacity of 8.3 million tons per annum (including joint ventures Ottana Polimeri, Trevira and Polyprima which will be accounted on equity income basis). IVL has a leading market position within the polyester value chain in Thailand, North America and Europe. Capacity End 2011 Committed Capacity by End 2012 Committed Capacity by End 2013 Million tpa % Million tpa % Million tpa % *Consolidated Asia 2.5 47% 2.7 41% 3.0 41% MEA - - - - 0.1 1% Europe 1.1 21% 1.6 25% 2.0 28% North America 1.7 32% 2.2 34% 2.2 30% Total 5.3 100% 6.5 100% 7.3 100% *Equity Income Asia - - 0.5 50% 0.5 50% Europe 0.5 100% 0.5 50% 0.5 50% Total 0.5 100% 1.0 100% 1.0 100% Grand Total 5.8 100% 7.5 100% 8.3 100% Note: "tpa" is tons per annum *Reported volumes for capacity, production, sales and utilization include only Consolidated volumes and excludes Equity income volume Note 1) The consolidated financials are based upon elimination of intra-company (or intra business segment) transactions. For this reason the total of each segment may not tally with consolidated financials. Net profit after tax and minority for 2011 includes net extraordinary gain of US$ 213 million (Baht 6,510 million) of which US$ 274 (Baht 8,369 million) is towards income from gain on a bargain purchase or negative goodwill on completed acquisitions (details are provided in the Note 5 - Acquisitions of subsidiaries in the Audited Financial Statements), US$ 20 million (Baht 613 million) towards transaction expenses incurred on acquisitions completed during the year, and US$ 47 million (Baht 1,434 million) towards impairment loss due to floods for equity holders in 4Q 2011 and US$ 6 (Baht 188 million) towards inventory gain. Gain on bargain purchase on Trevira acquisition in 3Q 2011 and Polyprima acquisition in 4Q 2011 is part of share of profit in Joint Venture Investments in the financial statement. 2010 net profit after tax and minority includes net extraordinary gain of US$ 113 million (Baht 3,641 million) of which US$ 77 million (Baht 2,451 million) is towards income from gain on a bargain purchase or negative goodwill from the acquisition of UAB Ottana Polimeri Europe and utility assets in Rotterdam, Netherlands, US$ 1 million (Baht 29 million) towards transaction expenses incurred on acquisitions and US$ 37 (Baht 1,161 million) towards inventory gain. Gain on bargain purchase on Ottana Polimeri acquisition in 3Q 2010 is part of share of profit in Joint Venture Investments in the financial statement. Core EBITDA is after excluding inventory gain/loss from reported EBITDA. Inventory gain/loss in a period results from movement in prices of raw materials and products from end of last reported period to the end of current reported period. The cost of sales are impacted by inventory gain/loss wherein inventory gain decreases cost of sales and inventory loss increases cost of sales. Beginning from January 1, 2011, IVL has adopted and applied new and revised Thai Financial Reporting Standards (TFRS) in accordance with the announcement by Federation of Accounting Policy "FAP", Thailand. The adopted new and revised TFRS are in the following areas: Presentation of financial statements, Accounting for business combinations, Accounting for property, plant and equipment and Accounting for employee benefits. The total shareholders' equity as on January 1, 2011 has been restated by Baht 284 million. The previous periods are restated for comparison purpose; details are provided in the Note 3 - Changes in Accounting Policies in the Audited Financial Statements. Forward-Looking Statements: This earnings release includes forward-looking statements concerning current expectations for demand for the company's products, implementation and impact of previously announced growth initiatives, Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. The Polyester Chain businesses are generally traded in US dollars and therefore IVL believes in helping its reader with translated US Dollar figures. IVL reporting currency is in Thai Baht and the accompanying pages are an integral part of this report. The accompanying pages report the Audited Thai Baht results of 4Q 2011 and its translation in US Dollars at average exchange rates and closing exchange rates where applicable. Readers should rely on the Thai Baht results only. IVL CONSOLIDATED RESULTS Financial Status and Ratios IVL net debt to equity is 0.7 times at the end of year 2011 which is lower than 0.9 times at the end of year 2010. The lower net debt to equity has been achieved despite completing major capex and investment of US$ 1,032 million for acquisitions to add 2.3 million tons of capacity for PET polymers and Polyester fibers and yarns. The capex and investments have been funded with a mix of long term loans, cash proceeds from rights issue and cashflow from operations. IVL net debt increased from US$ 996 million at end of December 31, 2010 to US$ 1,377 million at end of December 31, 2011, an increase of US$ 381 million only. The bank overdrafts and short term loans increased YonY by US$ 254 million in line with increase in total production volume by 1.2 million tons from 3.2 million tons in year 2010 to 4.4 million tons in year 2011 and higher average prices for products. The table below provides movement of total debt and net debt in US$ million; 4Q11 3Q11 4Q10 Bank overdraft and short-term loans 432 331 178 % of Total Debt 22% 21% 17% Long term debt (Current-portion) 204 184 197 % of Total Debt 11% 11% 19% Long term debt (Non current-portion) 1,064 1,084 689 % of Total Debt 55% 68% 65% Debentures (Non current-portion) 236 - - % of Total Debt 12% - - Total Debt 1,936 1,598 1,064 Cash & Cash under management 559 360 67 Cash and cash equivalents 379 130 49 Current investments 179 230 18 Total Net Debt 1,377 1,238 996 Financial Ratios Interest Coverage (times) 2.7 9.1 12.0 Net debt to EBITDA (times) LTM basis 2.6 1.9 2.2 Net debt-to-Equity (times) 0.7 0.6 0.9 Debt to Equity (times) 1.0 0.8 1.0 The Net Gearing ratio decreased to 43% as at 31th December 2011 from 48% at the end of year 2010. The ROCE achieved for year 2011 is 16%, which does not include extraordinary income, which is equal to 16% in 2010 on the same basis. The current ratio has improved to 1.6 times as at 31th December 2011 from 1.1 times at the end of year 2010. As at 31th December 2011, IVL has high liquidity of around US$ 1.4 billion with unutilized credit facilities of around US$ 836 million and cash and cash under management of US$ 559 million. The table below provides repayment schedule of long-term debt and debentures in US$ million; Year Repayment of long-term debt Repayment of debentures 2012 204 - 2013 282 - 2014 263 - 2015 244 - 2016 197 91 2017 or later 78 145 Total 1,268 236 Cash Flow IVL generated US$ 285 million of cash from operating activities in 2011, lower than cash from operating activities of US$ 328 million generated in 2010. The higher prices of all our products and higher volumes from acquisitions led to cash outflow for working capital of US$ 245 million in 2011. The free cash flow before capex was US$ 207 million compared to US$ 369 million in 2010. During the year, there was net cash outflow for capex and investments of US$ 1,032 million primarily for the acquisitions of PET plant in China, the Invista PET and Polyester plants in USA & Mexico, the SK Chemicals PET and Polyester plants in Indonesia and Poland, Trevira Polyester plants in Europe, Wellman Polyester plants in Europe, and Polyprima PTA plant in Indonesia. The capex and investments are funded by long term loans from banks, debentures and proceeds from the right issue of shares. IVL raised US$ 565 million in cash proceeds from the rights issue of shares in February 2011 and US$ 246 million proceed from issuance Thai Baht debentures in October 2011. The consolidated cash and cash equivalents as on December 31, 2011 are US$ 559 million (Baht 17,707 million) ensuring a healthy financial position and high liquidity in the group. Rights issue of shares In November, 2010, the IVL Board of Directors approved the issuance of 481,585,672 free Transferable Subscription Right (TSRs) or "IVL-T1" to the Company's existing shareholders (rights issue) at the ratio of 9 existing shares to 1 TSR. The TSR has an exercise ratio of 1 TSR for 1 share. The issuance and offering of the TSRs was subsequently approved in the Extraordinary General Meeting of Shareholders convening in December, 2010. On February 24, 2011 the subscription of TSRs was completed with 99.67% of TSRs being exercised into shares. Total new 479,986,198 shares started trading on the SET on March 3, 2011. The company received net proceeds from this rights issue of US$ 565 million. Issuance and offering of Thai Baht Debentures The extraordinary general meeting of shareholders held on 22 September 2011 approved the issue of debentures up to an amount not exceeding Baht 25,000 million (in Baht or equivalent foreign currency) for a maturity not exceeding 15 years. On 19 October 2011, the Company raised in cash Baht 7,500 million through the issue of unsubordinated and unsecured Baht debentures to the public. The debentures issued are for Baht 2,900 million with a maturity of 5 years, Baht 1,400 million with a maturity of 7 years, and Baht 3,200 million with a maturity of 10 years. The details of issue are; 5 Year Tranche Baht 2,900 million Coupon 4.70% 7 Year Tranche Baht 1,400 million Coupon 5.04% 10 year tranche Baht 3,200 million Coupon 5.35% The issue has achieved objectives of access to the bond market, increase average life of debt, lock-in fixed interest rate for long term, refinance existing high cost debt and liquidity for planned capex and investments. The company rating and issue rating is A+ by Thai Rating Information Service "TRIS", Thailand. Table 1 IVL : KEY OPERATING DATA 4Q11 vs. FY11 vs. 4Q11 3Q11 4Q10 3Q11 4Q10 FY11 FY10 FY10 *Total capacity (in Tonnes) 1,368,158 1,360,617 847,887 1% 61% 5,098,742 3,260,861 56% PET resins 797,904 797,905 374,856 0% 113% 2,886,450 1,402,013 106% Polyester & wool 129,159 121,617 72,264 6% 79% 462,387 268,848 72% PTA 441,095 441,096 400,767 0% 10% 1,749,905 1,590,000 10% **Total production (in Tonnes) 1,054,135 1,212,053 825,983 -13% 28% 4,361,313 3,185,503 37% PET resins 554,220 684,023 342,930 -19% 62% 2,322,128 1,306,728 78% Polyester & wool 107,383 116,127 75,649 -8% 42% 418,362 283,998 47% PTA 392,531 411,903 407,405 -5% -4% 1,620,823 1,594,777 2% Combined operating rate (%) 77% 89% 97% -14% -21% 86% 98% -12% Consolidated EBITDA/ton (USD) 41 127 171 -68% -76% 128 136 -6% Core EBITDA/ton (USD) 75 111 127 -33% -41% 127 125 1% *Capacity based on available days in the quarter for production excluding J/V capacity **Production volumes based on equivalent production Table 2 IVL : CASH FLOW FY11 vs. Baht in millions FY11 FY10 FY10 EBITDA 17,021 13,777 24% Net working capital and others (8,795) (273) 3122% Net financial expenses (1,736) (1,333) 30% Income tax (192) (469) -59% Free cash flow before Capex 6,298 11,702 -46% Capital expenditures (6,171) (2,418) 155% Net (acquisitions) disposals of subsidiaries and joint ventures (25,316) (4,124) 514% Free cash flow after Capex (25,189) 5,160 -588% Dividends (5,630) (1,489) 278% Proceeds from issues of shares 17,224 3,825 350% Changes in net debt 13,595 (7,496) -281% Note: The consolidated financials are based upon elimination of intra-company (or intra business segment) transactions reason which the total of each segment may not tally with consolidated financials. Table 3 IVL : FINANCIAL RATIOS 4Q11 3Q11 4Q10 FY11 FY10 Current ratio (times) 1.6 1.5 1.1 1.6 1.1 Net gearing ratio (%) 43% 39% 48% 43% 48% *Net operating gearing ratio (%) 39% 37% 46% 39% 46% Interest coverage ratio (times) 2.7 9.1 12.0 9.0 10.6 **ROE (%) -11% 25% 55% 35% 42% ***ROCE (%) 1% 15% 23% 16% 18% *Based on net operating debt which is net debt less debt for capex and investments not generating revenue and earnings **Net profit after minority to average total equity attributable to shareholders ***Operating income to average capital employed (net operating debt plus total shareholder's equity) PET SEGMENT PET sales revenue in 2011 sharply increased by 132%, driven by both the volume growth from acquisitions completed in 1Q 2011 in China, Indonesia, Mexico, Poland, and USA and the product price increase. The segment achieved core EBITDA of US$ 361 million in 2011, an increase of 67% from the same period last year of US$ 216 million. The utilization rate of 80% reflects ramping-up of utilization at acquired facilities and impact due to natural disasters i.e. Tornados in 2Q 2011 and floods in Thailand. In 4Q 2011, production volumes and margins were lower on impact from de-stocking of inventories on falling product prices, shut down for full quarter of the plants in Lopburi, Thailand, and increase in conversion cost on lower utilization rates. Further, Asian PTA spreads were very low in 4Q 2011 that further pulled down the EBITDA allocated on inter-segment sales to PET. PET Core EBITDA in 4Q 2011 was US$ 55 million, a decrease of 43% QonQ and an increase of 7% YonY. The acquisitions have been successfully integrated and year 2012 will be the first full year of operations of acquired business in year 2011 as well as startup of brownfield expansions in China and Rotterdam in mid year. Certain operational improvement measures at the acquired facilities will further strengthen costs and Lopburi startup in 2Q will help strengthen PTA and PET revenues in Thailand. Table 4 PET : CAPACITY AND UTILISATION (%) 4Q11 vs. FY11 vs. 4Q11 3Q11 4Q10 3Q11 4Q10 FY11 FY10 FY10 Production capacity (in Tonnes) 797,904 797,905 374,856 0% 113% 2,886,450 1,402,013 106% Production volumes (in Tonnes) 554,220 684,023 342,930 -19% 62% 2,322,128 1,306,728 78% Utilisation rate (%) 69% 86% 91% 80% 93% *Capacity based on available days in the quarter for production. Table 5 PET : SALES REVENUE 4Q11 vs. FY11 vs. 4Q11 3Q11 4Q10 3Q11 4Q10 FY11 FY10 FY10 Total revenues Baht in millions 30,239 36,569 14,495 -17% 109% 129,671 58,073 123% USD in millions 975 1,214 483 -20% 102% 4,252 1,832 132% Growth in Baht revenues from: Volume growth -17% 65% 73% Price movement -1% 41% 52% Exchange rate movement 1% 3% -2% Proportion of revenues by geographic Thailand 2% 5% 7% 4% 7% Asia (excluding Thailand) 10% 13% 4% 10% 5% North America 46% 45% 34% 44% 34% Europe 30% 29% 46% 32% 47% Rest of the World 12% 7% 8% 10% 7% Table 6 PET : OPERATING EBITDA 4Q11 vs. FY11 vs. 4Q11 3Q11 4Q10 3Q11 4Q10 FY11 FY10 FY10 *Core EBITDA Baht in millions 1,704 2,891 1,543 -41% 10% 11,015 6,836 61% USD in millions 55 96 51 -43% 7% 361 216 67% *Operating EBITDA (more)