Innovative and Sustainable Power for All Global Power Synergy Public Company Limited
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Annual Report Annual Report 2019 2019 INNOVATIVE AND SUSTAINABLE POWER FOR ALL GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED PUBLIC COMPANY SYNERGY POWER GLOBAL GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED 555/2 Energy Complex Building B, 5th Floor, Vibhavadi-Rangsit Road, Kwaeng Chatuchak, Khet Chatuchak, Bangkok 10900 Tel: 0 2140 4600, Fax: 0 2140 4601 www.gpscgroup.com INNOVATIVE AND SUSTAINABLE POWER FOR ALL GLOBAL BEST PRACTICE IN POWER BUSINESS Investors can acquire company’s information from Annual Disclose Form (Form 56-1) as shown in www.sec.or.th or the company’s website at www.gpscgroup.com CONTENTS OPERATIONAL HIGHLIGHT 8 MESSAGE FROM CHAIRMAN AND PRESIDENT AND CEO 10 REPORT OF THE AUDIT COMMITTEE 12 REPORT OF THE NOMINATION AND 14 REMUNERATION COMMITTEE REPORT OF THE CORPORATE GOVERNANCE COMMITTEE 15 REPORT OF THE RISK MANAGEMENT COMMITTEE 16 AWARDS AND RECOGNITIONS 18 POLICY AND BUSINESS OVERVIEW 20 NATURE OF BUSINESS OPERATIONS 32 GENERAL INFORMATION 39 RISK FACTORS 50 INTERNAL CONTROL AND RISK MANAGEMENT 56 QUALITY, SECURITY, SAFETY, OCCUPATIONAL HEALTH, 61 AND ENVIROMENTAL MANAGEMENT SECURITIES AND SHAREHOLDERS INFORMATION 66 GPSC BOARD OF DIRECTORS 68 EXECUTIVE TEAM 82 MANAGEMENT STRUCTURE 84 CORPORATE GOVERNANCE 101 SUSTAINABILITY MANAGEMENT 128 CONNECTED TRANSACTIONS 140 MANAGEMENT’S DISCUSSION AND ANALYSIS 160 4 ANNUAL REPORT 2019 POWER ACCESSIBILITY Striving to generate accessible clean energy to create a foundation for strong and self-reliant communities 5 ANNUAL REPORT 2019 QUALITY OF LIFE Elevating the quality of life through electricity and leveraging power expertise to develop communities in remote areas 6 ANNUAL REPORT 2019 ECOSYSTEM Emphasizing eco-conscious and eco-friendly consumption of resources through operational efficiency enhancement 7 ANNUAL REPORT 2019 SUSTAINABLE INNOVATION Fostering sustainability through innovative technologies that promote environmental and energy conservation 8 OPERATIONAL HIGHLIGHT FINANCIAL HIGHLIGHTS 300,000 252,017 ANNUAL REPORT 250,000 (THB million) 2019 Total Assets 200,000 Total Liabilities 150,000 141,841 Total Shareholders’ Equity 110,176 Total Revenues 100,000 66,562 64,439 59,968 EBITDA 50,000 40,374 42,349 24,880 19,594 20,025 22,090 16,783 Net Income (Loss) 4,192 5,457 3,175 3,359 4,061 0 2017 2018 2019 Remark: Total revenue includes revenue from Nitrogen sale. * EARNINGS PER SHARE (THB/share) DIVIDEND PER SHARE (THB) DIVIDEND YIELD (%)** 2017 2.12 2017 1.25 2017 1.60 2018 2.24 2018 1.25 2018 2.14 2019 2.25 2019 1.30 2019 1.52 FINANCIAL RATIOS 2017 2018 2019 EBITDA to Revenue from Sale (%) 20.93 21.93 25.21 Interest Coverage Ratio (times) 7.85 7.11 1.86 Net Debt to Equity Ratio (times) 0.29 0.27 0.78 Return on Equity (%) 8.39 8.55 5.76 Return on Assets (%) 5.66 6.25 3.79 Remark: * Dividend payment from the 2019 operating results at THB 1.30 per share is divided into interim dividend for the first half of 2019 at THB 0.50 per share which was paid to shareholders. The remaining dividend for the second half operating results for 2019 will be paid at THB 0.80 per share. However, the right to receive dividend payment is subject to the approval of the 2019 Annual General Meeting of Shareholders. ** Calculated from GPSC’s closing share price on period end 9 PRODUCTS 2017 2018 2019 Electricity (GWh) 4,365 5,412 17,566 Steam (Thousand tons) 6,429 6,572 12,821 (Thousand Chilled Water refrigeration tons) 25,740 27,266 29,343 (million cubic Industrial Water meters) 4 5 14 Refuse Derived Fuel: RDF (tons) - 4,491 13,707 ANNUAL REPORT 2019 AVAILABILITY PER CONTRACTED 2017 2018 2019 AVAILABLE HOURS (IPP) Glow IPP Power Plant (%) N/A N/A 100 GHECO-One Plant (%) N/A N/A 100 Sriracha Power Plant (%) 100 100 99.94 Accumulative Work Man-hours without Lost Time Accident 2017 6.26 2018 7.83 2019 9.44* million million million (Since 2013) hours hours hours Number of Plant Incident 13 (0) (SPP/Cogen.) 2017 times 2018 25 (2) 2019 90 (12) (and impact to industrial customers) times times Remark: * Not including the operating results of Glow Energy Public Company Limited. PRODUCT SALES VALUE 0.9% 0.8% 0.30% 0.02% 0.4% 0.05% 1.3% 0.5% 1.3% 0.4% 1.03% 0.15% 22.1% 15.2% 23.63% 34.3% 29.3% 0.02% 20.79% 2017 2018 0.46% 2019 0.02% 20,025 24,880 0.06% 66,562 million baht million baht million baht 1.1% 40.6% 0.2% 51.3% 53.50% 0.2% IPP SPP VSPP Power (Abroad) Steam Industrial Water Chilled Water Service RDF Nitrogen 10 MESSAGE FROM CHAIRMAN AND PRESIDENT & CEO ANNUAL REPORT 2019 Mr. Chavalit Tippawanich President&CEO Mr. Pailin Chuchottaworn Chairman 11 Dear Shareholders, It was a year of mediocre global and domestic economic growth, caused by the ongoing trade war and geopolitical instability, coupled with a far-from-healthy energy price situation. Despite these, Global Power Synergy Pcl (GPSC) has achieved its business goals and significantly grown its profit with capacity growth in power and steam generation alike, resulting from business acquisition and commercial operation of various invested projects. As for sustainability, we still continued to value and implemented innovation, personnel development, and engagement in community, social, and environmental improvement of standards. As a result, our financial position and potential for consistent and sustainable growth are robust. ANNUAL REPORT 2019 This year we acquired the business of Glow Energy Public practice to be a prototype for energy management and for Company Limited (GLOW) and delisted its shares from SET. Wang Chan Valley to be Thailand’s innovation research district. The move resulted in our profits of 21 percent higher than last year with increases in business volumes in this very first year As for organization administration, we value and stress the of acquisition, while enabling us to book synergy value from development of personnel, organization, and innovation through joint operation of sectors apart from enhancing power and our ACT SPIRIT work values and corporate-wide application utility security for greater stability of our customers. We also of risk management. Specifically, we routinely assess, analyze, achieved notable success in post-acquisition capital structural and revise our management practices, which we believe administration by issuing and offering recapitalization shares contributes to our sustainable goal achievement. worth THB 74 billion and issuing debentures worth THB 35 billion at a suitable cost of funds, designed for repayment We particularly value sustainable partnership to bring good of short-term loans for the GLOW acquisition. Finally, we things to communities, society, and the environment through maintained our investment grade, attested by credit rating various projects. To cite a few instances, the Restore Lives, agencies like S&P Global Ratings and Fitch Ratings. Restore Beach Project’s key goal is to preserve marine ecology and develop communities in parallel with sustainable business. In 2019 we announced commercial operation of three more The Zero Waste Village Project advocates community awareness projects. First, the 65-MW Nam Lik 1 Project in Lao People’s of proper garbage management to cut community waste and Democratic Republic, where our equity is 40 percent. Second, build on it to generate income or for social enterprises. Finally, the 45-MW, wholly owned Central Utility Plant 4 Phase 1 in the Young Social Innovator Project promotes a forum for Rayong with 70 T/H steam capacity. And third, the 1,285-MW high-school and vocational education students to present Xayaburi Project, also in LPDR, where our equity is 25 percent. ideas through projects designed to resolve social, economic, Our business growth through energy technology and innovation natural resource, and environmental problems in a sustainable is evident in the pilot installation of the Energy Storage System way on actual sites. (ESS), extended from solar rooftop installation at PTT Stations and Café Amazon outlets to grow the capability of solar power Thanks to our active drive and value given to communities and consumption while trimming energy bills for these service the environment, this year we have garnered assorted acclaim, Mr. Pailin stations and outlets. This prototype consumption of stored including the Asia Responsible Enterprise Award 2019 (Green Chuchottaworn energy is efficient, tangible, and extendable to commercial Leadership Award), a prototype low-carbon industrial works Chairman successes. award, and a 2019 award for industrial works’ sustainable responsibility for society and communities. We are committed to evolving power innovations to accommodate the future in Wang Chan Valley by experimenting For 2020, GPSC is committed to growing our business further with solar power management (both solar rooftops and solar by extending our investment both geographically and through floating PVs) in conjunction with energy storage installation more extensive innovation. The Board of Directors, the and the application of the Blockchain technology for building- management, and employees are grateful for your perennial to-building power trade management. The design is for the trust in us. 12 REPORT OF THE AUDIT COMMITTEE Dear Shareholders, The Audit Committee consists of three independent directors, all of whom command pertinent ANNUAL REPORT expertise and experience in engineering, energy businesses, law, financial accounting, and corporate management. They are, therefore, qualified to review the credibility of financial statements in 2019 accordance with the regulations of the Office of Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET). The Audit Committee comprises the Chairman, Mr. Payungsak Chartsutipol, and two audit committee members, namely Mrs. Suvimol Chrityakierne, and Maj. Gen. Chaowalek Chayansupap. On March 4th, 2019, the committee’s composition was changed because Mr. Payungsak Chartsutipol resigned from his post in the Audit Committee (to become Chairman of an affiliated company).