Company Performance for 3rd Quarter2006

BackNov 14, 2006

TRANSLATION

RPC/HO-SET/ELICID 00024/06

November 14th, 2006

Subject : Company Performance for 3rd Quarter 2006

To : President The Stock Exchange of Thailand

Rayong Purifier Public Company Limited and its subsidiaries would like to clarify the 133.25 % or 167.84 Million Baht decrease in Company's Net Profit in 3rdQuarter 2006 (3Q06) compared to 3rd Quarter2005 (3Q05). The key factors that caused the decrease from Net Profit 125.96 Million Baht in 3Q05 to Net Loss 41.88 Million Baht in 3Q06 can be summarized as follows:-

1. Decrease in Gross Profit
In 3Q06, the Gross Profit of the Company has been decreased by 196 Million Baht or 79% compared to the same period of 2005. The decrease can be clarified as follows

- Increase in Cost of Sales due to Raw Material Quality Cost of sales for this period was higher than normal because, in the third quarter of 2006, the supplier suddenly delivered raw materials with quality much differ from that specified in the agreement and what have always been supplied to the Company in the past. Therefore, the Company had additional cost for product improvement and other related costs amounting to 136.45 Million Baht. Based on the negotiation with the supplier, the Company will receive the compensation of 52.7 Million Baht. The company has already receipted 26 Million Baht and the rest will be settled in the future.

- Fluctuation of World Oil Price
As regard to the world oil price fluctuation in 3Q06, the Gas Oil price in Singapore market have been sharply and constantly decreased for more than 10 USD/BBL from the average of 86 USD/BBL in June 2006, to the average of 76 USD/BBL in September 2006. Therefore, the Company has 105 Million Baht of Inventory Loss in 3Q06 compared to 115 Million Baht of Inventory Gain in 3Q05.

2. Selling and Administrative Expenses
In the 3Q06, the Selling and Administrative Expenses of the Company have increased 22 Million Baht or 26 % compared to 3Q05. This increase composed of about 6 Million Baht from the increase of Selling Expenses and 16 Million Baht from Administrative Expenses of the Company and its subsidiaries, due to the increasing number of the Company s gas stations.

3. Interest Expense
The company has 14 Million Baht of Interest Expense, increased 9 Million Baht or 180% compared to 3Q05. It is because of the rising interest rate and, also, the higher short term financing requirement to increase Working Capital to handle the Oil Prices which were much higher than of the same period of last year. As a result, the Company s net performance has decreased by 133.25 % or 167.84 Million Baht in 3Q06 compared to net profit in 3Q05.

Please be so informed.

 

Sincerely Yours,

 

Mrs. Siraporn Krishnakan
Assistant to Managing Director