ANNUAL REPORT CK POWER2 PUBLIC0 COMPANY1 LIMITED8 ENDL ES S E N E R G Y “We Produce Energy, Energy Powers Our Lives” As a result of endless energy needs, the way we deal with such challenges from an ongoing increase in demands to a higher living standard requires significant effort. CKP is fully committed to using our knowledge and innovations to deliver reliable energy to all and ensure a sustainable development for all communities. “Attention, Care, Revive and Rehabilitate” To achieve energy reliability and sustainable business growth in the future, we thus give priority to the efficient use of natural resources. We meticulously control every single part of our production process to minimize potential negative impacts to ensure that the business, earth, water, sky, forests and all living things can coexist and grow together in a sustainable manner. Vision To be a leading power business company in Thailand and the ASEAN region, with efficient operation. Mission 1) To generate an optimal, stable and fair return for shareholders. 2) To be responsible to the environment, community and all stakeholders. 06 Financial Highlight CONTENTS 08 Message from Chairman of the Board of Directors 10 Board of Directors PART Business Operations 16 Business Policy and Overview 25 Nature of Business Operations 42 Risk Factors 47 Legal Disputes 49 General Information and Other 1 Significant Information PART Management and Corporate Governance 54 Information on Securities and Shareholders of the Company 62 Management Structure 86 Corporate Governance 115 Corporate Social Responsibility 2 127 Internal Control and Risk Management 135 Connected Transactions PART Financial Position and Operational Performance 150 Summary of Financial Statements 158 Management Discussion and Analysis 3 167 Financial Statements Financial Highlight Revenue Breakdown Earnings Before Interest, Taxes, (Unit : Baht Million) Depreciation and Amortization (EBITDA) 120 45 (Unit : Baht Million) 136 4,584 3,551 3,209 3,949 2018 9,115 4,865 2016 2017 2018 105 Net Profit Attributable to Equity 51 140 Holders of the Company (Unit : Baht Million) 599 3,318 2017 159 6,930 55 3,316 2016 2017 2018 63 40 148 Financial Position (Unit : Baht Million) 59,305 60,462 62,503 769 1,375 1,300 3,815 2016 28,030 28,428 29,681 6,359 2,293 30,506 30,659 31,522 2016 2017 2018 Hydro Project Mangement Income Shareholders’ Equity Cogeneration Others Interest-bearing Debt Solar Other Liabilities Remark: Excluding foreign exchange gain 06 ANNUAL REPORT 2018 (Unit: Baht Million) 2016 2017 2018 Revenue from Sales of Electricity 6,256 6,774 8,950 and Steam Project Management Income 63 105 120 Other Income 40 51 45 Total Revenues 6,359 6,930 9,115 Gross Profit 2,228 2,120 3,011 EBITDA 3,209 3,551 4,584 Net Profit Attributable to Equity Holders of the Company 55 159 599 Earnings Per Share* (Baht) 0.007 0.022 0.081 Total Assets 59,305 60,462 62,503 Total Liabilities 28,799 29,803 30,981 Total Shareholders’ Equity 30,506 30,659 31,522 Gross Profit Margin (%) 35.0% 30.6% 33.0% EBITDA Margin (%) 50.5% 51.2% 50.3% Net Profit Margin Attributable to Equity Holders of the Company (%) 0.9% 2.3% 6.6% Total Liabilities to Total Shareholders’ Equity Ratio (Times) 0.94 0.97 0.98 Net Interest-bearing Debt to Total Shareholders’ Equity Ratio (Times) 0.67 0.74 0.76 Current Ratio (Times) 5.15 2.36 2.52 Return on Equity (%) 0.3% 0.9% 3.3% Return on Assets (%) 0.1% 0.3% 1.0% * Calculated from weighted average number of ordinary shares ANNUAL REPORT 2018 07 Message from Chairman of the Board of Directors CK Power Public Company Limited The Company firmly believes that our (the “Company”) has invested in different strong operating results have been driven by types of power plant projects, not only in quality management systems based on Thailand but also in the ASEAN region, with good corporate governance. The Company commitment to providing optimal, stable therefore prioritizes the development of and fair returns for shareholders, partners people within the group companies and and other stakeholders, in parallel with power plants to enhance operating standard continuously giving priority to environment, and ensure consistency and compliance with communities and concerned parties of all the constantly changing and developing groups, which have reflected in our satisfactory regulations. 2018 marked the first year in results of operations in 2018. which the Company achieved the scores of In 2018, the Company successfully 100 percent from the assessment of the completed several initiatives, including the quality of the Annual Ordinary General Meeting reduction of the Company’s finance cost of Shareholders (AGM) by the Thai Investors through the issuance of the debentures Association and also received an “Excellent” to refinance the existing debentures, with rating from Corporate Governance Report of TRIS Rating Co., Ltd. affirming the Company’s Thai Listed Companies 2018 published by corporate rate at “A/Stable”, the continued the Thai Institute of Directors Association. reduction of the finance cost of the Nam These achievements are proud representations Ngum 2 Hydroelectric Power Project by of the Company’s relentless drive for sustainable the issuance of debentures 1/2018 for and stable growth. repayment of the existing loans, as well as Furthermore, the Company prioritizes the completion of construction of the Nabong building of a long lasting sustainable relationship Substation according to schedule. Additionally, with the communities, societies and the the Company continued to look for business environment as it recognizes the importance opportunities to generate sustainable revenue of contributing and being part of them. In through an increase in investment percentage doing so, the Company not only supports in the Xayaburi Hydroelectric Power Project enhancement of the quality of life in the by another 7.5 percent by means of acquisition communities adjacent to the power plants, but of shares from Bangkok Expressway and also aims to serve as part of the mechanisms Metro Public Company Limited, which to drive and share the prosperity to remote increased the Company’s shareholding rural communities of the country. The Company percentage in the Xayaburi Hydroelectric achieves these objectives through the Power Project by 37.5 percent. Xayaburi Company’s Hing Hoi projects, where the Hydroelectric Power Project was 97 percent Company applied its engineering knowledge complete as at the end of 2018 and would for social contributions and, at the same time, commence the Commercial Operation in gained stronger volunteering spirits among the fourth quarter of 2019 as planned. all executives and staff. The Hing Hoi projects Moreover, the Company further invested in have been done for the third year in a row. In solar rooftop and solar farm power projects 2018, the Company has implemented the under operation of Bangkhenchai Co., Ltd., Hing Hoi project, in association with the totaling six projects, for production and Border Patrol Police Sub-Division 33, to distribution of electricity to various alliances construct the school building and appurtenant in Phra Nakhon Si Ayutthaya, Samut Sakhon, structures under the energy-saving concept Nakhon Pathom and Chachoengsao Provinces, for the Ban Mae Munai Border Patrol Police with construction commencing in the third Learning Center, Tambon Mae Na Chon, quarter of 2018. It is expected that all projects Amphoe Mae Cham, Chiang Mai Province. would be completed and ready for commercial On January 22, 2019, Her Royal Highness operations within 2019. Princess Maha Chakri Sirindhorn graciously presided over the opening ceremony of the Ban Mae Munai Border Patrol Police Learning Center Patronized by CK Power Public Company Limited, which was the immeasurable royal grace and the greatest honor for the Company, executives and staff. 08 ANNUAL REPORT 2018 On behalf of all directors, executives, and employees, I would like to extend my thanks to all of our shareholders, alliances, and stakeholders of all sectors for your trust in and continued support to the Company and its potential. Please rest assured that the Board of Directors, the management team and all staff are fully committed to devoting themselves to the successful development of the organization, adhering to the good corporate governance practice, and being responsible for all stakeholders. This is to generate a steady growth and a good returns for shareholders, as well as to play a part in enhancing stability of the energy sector of the country, while also taking part in developing society, communities and the environment to achieve sustainability. Dr. Thanong Bidaya Chairman of the Board of Directors S R O T C E R I D Dr. Thanong Bidaya Mr. Plew Trivisvavet Chairman of the Board of Directors Chairman of the Executive Committee Independent Director August 23, 2012 August 23, 2012 Director June 3, 2011 Education/Training • Doctor of Philosophy in Management, Education/Training Northwestern University, U.S.A. • Honorable Doctorate of Engineering (Civil Engineering) • Master of Economics, Northwestern University, U.S.A. Kasetsart University • Bachelor of Economics, Yokohama • Honorable Doctorate of Science (Civil Engineering) National University, Japan Thai-Nichi Institute of Technology • Directors Accreditation Program (DAP), Class 25/2004 • Honorable Doctorate of Engineering (Civil Engineering) Thai Institute of Directors Association Nakhon Phanom University • Honorable Doctorate of Engineering (Civil Engineering) Positions Rajamangala University of Technology