IRPC Annual Report 2012 EN.Pdf
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CONTENTS 1 Message from the Chairman 8 Key Performance 9 Financial Highlights 10 Milestones 2012 12 Awards and Recognition Board Responsibility 16 Board of Directors 28 Executives 34 Report of the Audit Committee 35 Internal controls 36 Organization Structure 37 Corporate Governance Report Business Structure 59 Business Structure and Shareholding 60 Nature of business 64 Individual Product Line’s Business 71 Revenue Structure 72 Connected Transactions Operating Result 79 Performance summary 95 Market Overview and Industry Outlook 104 Management Discussion and Analysis (MD&A) Corporate Responsibility 117 Quality, Safety, Occupational Health, and Environmental Management 125 Corporate Social and Environment Responsibilities 130 Eco-Industrial Zone 133 Sustainability Development Management Structure 139 Management Structure 156 Information Financial Statement 163 Report of Board of Directors’ Responsibility for Financial Reporting 164 Auditor’s Report Appendix 238 Abbreviations and Technical Terms 240 Compliance with Corporate Governance This year our crude oil throughput amounted to 64.22 million barrels, an CONTENTS average of 175,000 barrels a day and a 10% rise from the previous year’s level of 160,000 barrels a day. Meanwhile, our sales rose 16% from 56.65 1 Message from the Chairman to 66.09 million barrels. As a result, our net sales revenue amounted 8 Key Performance to Baht 283,668 million, a 20% rise from last year, whereas our product prices rose by 4%. 9 Financial Highlights 10 Milestones 2012 Yet, the declining demand as a result of the European financial crisis 12 Awards and Recognition and the economic slowdown in China and the US depressed our gross margin to USD 5.83/barrel, as opposed to USD 9.64/barrel last year, thus Board Responsibility substantially eroding our performance. While IRPC tried hard to take 16 Board of Directors measures to raise its efficiency and reduce assorted costs throughout the 28 Executives year, it suffered a net loss of Baht 959 million against a net profit of Baht 34 Report of the Audit Committee 3.941 billion last year. 35 Internal controls As for our investment, IRPC focused on the Phoenix Project to ensure goal 36 Organization Structure achievement. At the year-end, we registered 43% progress, equivalent 37 Corporate Governance Report to Baht 2.629 billion in benefits this year. The project will indeed enable IRPC to execute its operation with greater competitiveness. In addition, Business Structure our project on propylene capacity expansion from 312,000 to 412,000 tons/ 59 Business Structure and Shareholding year began its commercial start-up in October this year. Our project on 60 Nature of business ABS and SAN polymer capacity expansion from 60,000 to 120,000 tons/ 64 Individual Product Line’s Business year is nearly completed and due for a start-up in April 2013. 71 Revenue Structure This year, we completed construction contractor hiring for the Upstream Project 72 Connected Transactions for Hygiene and Value Added Products (UHV), a key investment project among all projects under Phoenix, designed to raise the propylene-based Operating Result product line capacity, boost the competitiveness of IRPC’s petroleum business, 79 Performance summary and extend its proportion in the petrochemical and special product segment 95 Market Overview and Industry Outlook a healthy industry with high returns on investment. The project is due for 104 Management Discussion and Analysis (MD&A) completion in 2015, which will raise IRPC refinery’s capacity to 215,000 barrels a day, as opposed to 175,000 barrels a day this year. Corporate Responsibility 117 Quality, Safety, Occupational Health, and Environmental Management 125 Corporate Social and Environment Responsibilities 130 Eco-Industrial Zone 133 Sustainability Development Management Structure 139 Management Structure 156 Information Financial Statement 163 Report of Board of Directors’ Responsibility for Financial Reporting 164 Auditor’s Report Appendix 238 Abbreviations and Technical Terms 240 Compliance with Corporate Governance IRPC has sought to supplement maximum value to its businesses by identifying investment opportunities so as to diversify its business risks. We invested jointly with Ube Chemicals (Asia); bolstered the organization by laying down strict audit and internal control systems; joined the national coalition on anti-corruption; established business and social alliances; cultivated common values for employees’ responsible business conduct to the organization, society, the environment, and all stakeholders; and constantly valued safety, environmental impact mitigation, and community stewardship. As a result, the Department of Industrial Works has named IRPC Industrial Estate in Tambon Choeng Noen, Rayong, as a prototype for eco-industrial zones. Thanks to IRPC’s business preparedness, once our projects see their completion, we will be able to capitalize on our production capability by 2015. Once the world economy returns to normal and the supply-demand for petroleum and petrochemicals improves, IRPC will be able to promptly maximize its benefits. It is my belief that, through the diverse experience and competency of the Board, which defines IRPC’s vision, policies, and direction, together with our executives’ and employees’ strategies, earnest attention, and commitment to their work and IRPC’s preparedness—bolstered by the excellent understanding, confidence, and support of the shareholders, business partners, customers, financial institutions, and stakeholders—IRPC will overcome the obstacles and make a great stride in the long term to generate full benefits for the shareholders. On behalf of the Board, I sincerely express my gratitude to all. 4 (Mr. Prasert Bunsumpun) Chairman Annual Report 2012 5 IRPC Public Company Limited CSV Striving for “value” that goes beyond “commercial value” to strike the right balance between business and society. createsIRPC shared business value to supplement value to society while providing competitiveness to business. That way, optimal, sustainable benefits are enjoyed by all. CSV Striving for “value” that goes beyond “commercial value” to strike the right balance between business and society. createsIRPC shared business value to supplement value to society while providing competitiveness to business. That way, optimal, sustainable benefits are enjoyed by all. Key Performance 1% 21% 38% 78% 62% Petroleum product Domestic Petrochemical product Export Others 10% Petroleum product 2%Domestic Petrochemical product Export 17% 13% Others 55% 24% Petroleum Product Diesel Petrochemical Product 13% Gasoline Aromatics Fuel oil Olefins and Polyolefins Lube base oil and asphalt Styrenics 9% Other petroleum product Polyol Petroleum Product 57% Diesel Net Profit Petrochemical Product Gasoline Aromatics Sale FuelUnit oil : Baht Million Olefins and Polyolefins Lube base oil8,000 and asphalt StyrenicsUnit : Baht Million Other petroleum product Polyol 300,000 6,000 250,000 4,000 200,000 150,000 2,000 100,000 0 50,000 2010 2011 2012 0 2010 2011 2012 Total assets Total Liabilities Unit : Baht Million Unit : Baht Million 150,000 150,000 120,000 120,000 90,000 90,000 60,000 60,000 30,000 30,000 0 0 2010 2011 2012 2010 2011 2012 8 ความรับผิดชอบของคณะกรรมการ Financial Highlights (Unit : Baht Million) (1) 2010 (2) 2011 2012 Financial Position Current Assets 49,307 55,390 54,971 Total Assets 120,458 132,119 141,977 Current Liabilities 18,104 27,593 22,352 Total Liabilities 45,744 56,197 67,815 Shareholders’ Equity 74,714 75,922 74,162 Registered Capital 20,475 20,475 20,475 Paid-up Capital 20,170 20,434 20,434 Petrochemical Product Operating Performance Aromatics Olefins and Polyolefins Sales 221,611 246,888 292,430 Styrenics Polyol Cost of Goods Sold 212,319 235,491 289,770 Gross Margin 9,292 11,397 2,661 EBITDA (3) 8,239 10,189 4,125 Net Profit 6,100 3,941 (959) Financial Ratio Net Profit Margin 2.73% 1.60% (0.33%) Return on Assets 5.20% 3.12% (0.70%) Return on Equity 8.32% 5.23% (1.28%) Net Debt to Equity Ratio (4) 0.32 0.32 0.51 Dividend per share (Baht) 0.18 0.12 (5) 0.08 Book Value per share (Baht) 3.70 3.71 3.63 Earnings per share (Baht) 0.30 0.19 (0.05) Note : 1 Financial statements 2010 were restated. 2 Financial statements 2011 were restated 3 EBITDA means earnings before interest, taxes, depreciation, and amortization. 4 Net Debt means interest-bearing debt less cash and short-term investments. 5 The Board’s meeting on 19 February 2012 approved a dividend payment for the operating results of 2012 at Baht 0.08 per share. However, the approval for dividend payment will be proposed to the 2013 AGM for further consideration and approval. Annual Report 2012 9 IRPC Public Company Limited January March May June September November Acquired a long-term syndicated loan for its investment projects and business operations from local financial institutions totaling Baht 3.7 billion with a drawdown period up to year-end 2012 and a maturity date in 2020–regarded as flexible Collaborated with world-renowned With Thai Airways International Plc, Launched “POLIMAXX BANBAXX”, and in line with IRPC’s business Oxford University on R&D on signed an agreement on the a special polymer with an engrained structure and capital needs IRPC’s project to develop the investigation of carbon credit bacterial inhibitor that had passed Launched a construction project service business through I’M ACE high-performance polymers, striving for a viewing (observation) tower at Acquired a long-term dollar loan for high-quality petrochemicals and purchase from the Combined Heat the JIS Z 2801 standard test of seconded engineers to Samsung and Power plant Japanese Industrial Standards. the Phra Chedi Klang Nam for its investment projects from on assignments in the United Arab polymers for the market. Mangrove Ecology Learning Center foreign financial institutions totaling Emirates. in Honor of HM the King. This USD 100 million, with a maturity July Rayong attraction will in time be date in 2020.