GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED M CUBE ANNUAL REPORT 2016 SUSTAINABLE GROWTH MAXIMIZE MANAGE MOVE MAXIMIZE MANAGE MOVE VISION MISSION The global leading innovative Create long-term shareholders’ and sustainable power company value with profitable growth Deliver reliable energy through operational excellence to customers Conduct business with social and environmental responsibility Seek innovation in power and utility efficiency management through energy storage technology Investers can acquire company’s information from the annual disclose form (Form 56-1) as shown in www.sec.or.th or the company’s website at www.gpscgroup.com Content Message from General Information 2 the Board of Directors 64 Financial Highlights Securities and Shareholders 10 66 Information 12 Report of the Audit Committee 68 Management Structure Report of the Nomination and Board of Directors 14 Remuneration Committee 86 Report of the Corporate Management Team 15 Governance Committee 98 Report of the Risk Management Corporate Governance 16 Committee 108 18 Awards and Recognitions 124 Sustainability Management 20 Policy and Business Overview 132 Revenue Structure Power Industry Overview and Connected Transactions 32 Competition 134 Nature of Business Management’s Discussion 42 164 and Analysis Quality, Security, Safety, Occupational Board of Directors’ Responsibility 52 Health, and Environment Management 175 for Financial Reporting 56 Risk Factors 176 Independent Auditor’s Report Internal Control and Financial Statement 62 Risk Management 180 ANNUAL REPORT 2016 2 GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED Mr.Toemchai Bunnag Chief Executive Officer For GPSC’s continued growth, efficiency, and success MESSAGE FROM THE as PTT Group’s power flagship, this year we have undertaken crucial strategic change, namely the BOARD OF DIRECTORS amendment of the corporate vision, mission, and business goals, so that they may reflect current businesses and long-term objectives in corporate growth plans. And to enable GPSC to achieve its vision, mission, and goals, Dear Shareholders, we have adopted the “Maximize / Manage / Move” management scope. To elaborate, “Maximize” refers to In 2016, GPSC faced tough challenges to its mandate the strategy to conduct our core businesses. “Manage” of delivering results to all shareholders and stakeholders means the strategy to manage invested companies amid critical changes in economic and national to fulfill plans. And “Move” represents the strategy to circumstances, all extensively resulting in price volatility develop new projects. of energy and other commodities as well as volatile investment in the capital market. However, due to Apart from this shift in strategies, we have focused on commendable collaboration among the Board, the forging understanding of and confidence in GPSC’s management, and employees, GPSC has sailed through businesses. To this end, our management team has these testing times. constantly engaged international investors so as to grow their confidence in our business strategies, business processes, executives’ production caliber, control of projects with planned commercial operation, and administration of long-term sales agreements. MESSAGE FROM THE BOARD OF DIRECTORS 3 Mr.Surong Bulakul Chairman GPSC has consequently posted performance outcomes We continue to value human resource development characterized by certainty and growth, securely delivering across the company with a focus on raising business decent investment values. In 2016, our net profit process efficiency to keep pace with change under any amounted to THB 2,700 million, a rise of 42% from circumstances - innovation, technology, or economic last year. circumstances that are subject to change now and in the future. Regarding the management approach since the listing on the Stock Exchange of Thailand (SET), we have On behalf of the Board of Directors, the management, and adhered to Good Corporate Governance in our business employees, we therefore wish to express our appreciation conduct and to sound organizational management, to the shareholders and stakeholders for their remarkable coupled with responsibility to all stakeholders and due trust and confidence in us, both of which have long regard for the environment, all of which have earned formed a cornerstone for our businesses, which have us acceptance and trust from international institutional in turn achieved all goals under the 2016 plans. investors. Our market capitalization has therefore met Grievingly, however, Thailand is mourning the passing the SET 50 criteria. In addition, we have garnered of His Majesty the late King Bhumibol, an immense acceptance for corporate governance and sustainability loss for the entire nation. As a Thai company, we will management from assorted entities. For instance, apply the late king’s discourses on sufficiency economy assessment by the Thai Institute of Directors rated and promotion of renewable energy as our business GPSC as “Excellent” for its corporate governance. guidelines for managing PTT Group’s power flagship, Thaipat Institute, meanwhile, placed GPSC among while playing a key role in driving the national economy the top 100 listed companies known as ESG 100 and forging national energy security over future years. (Environment, Social, and Governance) in 2016. ANNUAL REPORT 2016 4 GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED Core Business Management Core business management amid fluctuating customers’ demand, machinery efficiency, production costs, and other factors affecting product price including regulations on contracts, safety, and the environment. At the bottom line, optimal profits and system security to bolster customers’ confidence. 5 Core Business Management Core business management amid fluctuating customers’ demand, machinery efficiency, production costs, and other factors affecting product price including regulations on contracts, safety, and the environment. At the bottom line, optimal profits and system security to bolster customers’ confidence. ANNUAL REPORT 2016 6 GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED COMBINED CYCLE POWER PLANT / RENEWABLE HYDRO OTHER COGENERATION POWER PLANT POWER PLANT POWER PLANT BUSINESSES Management of Invested Companies Steering commercial projects by GPSC’s invested companies for planned business execution, while keeping projects under construction on course for completion. 7 COMBINED CYCLE POWER PLANT / RENEWABLE HYDRO OTHER COGENERATION POWER PLANT POWER PLANT POWER PLANT BUSINESSES Management of Invested Companies Steering commercial projects by GPSC’s invested companies for planned business execution, while keeping projects under construction on course for completion. ANNUAL REPORT 2016 8 GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED Development of New Projects Pursuit of worldwide power business investment opportunities along with related business development for sustainable growth. 9 Development of New Projects Pursuit of worldwide power business investment opportunities along with related business development for sustainable growth. ANNUAL REPORT 2016 10 GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED FINANCIAL HIGHLIGHTS SUMMARY OF SIGNIFICANT FINANCIAL INFORMATION FINANCIAL Financial Overview Unit 2014 2015 2016 Total Assets (THB Million) Total Liabilities (THB Million) (Restated) 58,028 18,855 19,274 55,983 16,914 OPERATING 42,932 Revenue from Sales THB Million 23,654 22,444 20,675 EBITDA THB Million 2,726 2,772 3,809 Net Profit THB Million 1,581 1,906 2,700 Earnings per Share THB/Share 1.41 1.40 1.80 2014 2015 2016 2014 2015 2016 FINANCIAL Total Assets THB Million 42,932 55,983 58,028 Shareholders’ Equity (THB Million) Total Liabilities THB Million 16,914 18,855 19,274 Shareholders’ Equity THB Million 26,018 37,128 38,754 FINANCIAL RATIOS 26,018 37,128 38,754 Interest Coverage Ratio Times 3.58 4.29 6.09 2014 2015 2016 Current Ratio Times 1.57 3.58 2.78 Net Debt to Equity Ratio Times 0.35 0.10 0.22 Return on Equity Percent 6.42 6.22 7.38 Return on Assets Percent 3.66 3.82 5.04 FINANCIAL RATIOS Interest Current Ratio Net Debt to Return on Equity Return on Assets Coverage Ratio (Times) Equity Ratio (%) (%) (Times) (Times) OPERATING Revenue from Sales EBITDA (THB Million) Net Profit (THB Million) Earnings per Share 7.38 (THB Million) (THB/Share) 6.42 23,654 6.09 6.22 22,444 3,809 1.80 20,675 2,700 5.04 4.29 1.41 3.82 1,906 1.40 3.58 3.58 3.66 2,726 2,772 2.78 1,581 1.57 0.35 0.10 0.22 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 FINANCIAL HIGHLIGHTS 11 FINANCIAL HIGHLIGHTS SUMMARY OF SIGNIFICANT FINANCIAL INFORMATION FINANCIAL Financial Overview Unit 2014 2015 2016 Total Assets (THB Million) Total Liabilities (THB Million) (Restated) 58,028 18,855 19,274 55,983 16,914 OPERATING 42,932 Revenue from Sales THB Million 23,654 22,444 20,675 EBITDA THB Million 2,726 2,772 3,809 Net Profit THB Million 1,581 1,906 2,700 Earnings per Share THB/Share 1.41 1.40 1.80 2014 2015 2016 2014 2015 2016 FINANCIAL Total Assets THB Million 42,932 55,983 58,028 Shareholders’ Equity (THB Million) Total Liabilities THB Million 16,914 18,855 19,274 Shareholders’ Equity THB Million 26,018 37,128 38,754 FINANCIAL RATIOS 26,018 37,128 38,754 Interest Coverage Ratio Times 3.58 4.29 6.09 2014 2015 2016 Current Ratio Times 1.57 3.58 2.78 Net Debt to Equity Ratio Times 0.35 0.10 0.22 Return on Equity Percent 6.42 6.22 7.38 Return on Assets Percent 3.66 3.82 5.04 FINANCIAL RATIOS Interest Current Ratio Net Debt to Return on Equity Return on Assets Coverage Ratio (Times) Equity Ratio (%) (%) (Times) (Times) OPERATING Revenue from Sales EBITDA (THB Million) Net Profit (THB Million) Earnings per Share 7.38 (THB Million) (THB/Share) 6.42 23,654 6.09 6.22 22,444 3,809 1.80 20,675 2,700 5.04 4.29 1.41 3.82 1,906 1.40 3.58 3.58 3.66 2,726 2,772 2.78 1,581 1.57 0.35 0.10 0.22 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 ANNUAL REPORT 2016 12 GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED REPORT OF THE AUDIT COMMITTEE Dear Shareholders, standards, complete, timely, and reliable that are beneficial to investors and users.