The Bangchak Petroleum Public Company Limited Public The Bangchak Petroleum Annual Report 2013 The Bangchak Petroleum Public Company Limited Head Office : 10th Floor, Building A, Energy Complex, 555/1 Vibhavadi Rangsit Rd., Chatuchak, Bangkok 10900, Thailand. Tel 66 2140 8999 Fax 66 2140 8900 Annual Report 2013 www.bangchak.co.th The Bangchak Petroleum Public Company Limited Creatively conceiving green products: Way of a Green Society Bangchak Green Society. That’s what we yearn to become-our ultimate goal. Our ammunition? A business culture of ‘developing sustainable business, while safeguarding the environment and society’ and an employee culture of ‘being virtuous, knowledgeable, and contributive to society’ under an overarching corporate vision of “Greenergy Excellence”. Constantly we keep innovating ourselves-energy production processes, alternative energy, corporate energy-saving, and green energy commodities. Our bottom line? A fine balance between the value and merit of communities, society, and the environment in tandem with sustainable business growth. C o n t e n t s 05 58 124 Vision Value Statement Board of Directors Connected Transactions Mission Business Culture 78 138 Employee Culture Executive Management Management Discussion 07 102 and Analysis for Business Message from the Chairman Changes in the Securities Operation 08 Portfolios of the Board and the 157 Financial Highlights Executive Declaration of the Directors’ 09 103 Responsibility for the Financial Business Description Report of the Nomination and Statements 14 Remuneration Committee 158 Performance Review 2013 104 Independent 21 Report of the Corporate Auditor’s Report Awards of 2013 Governance Committee 160 23 107 Financial Statements Business Overview and Corporate Governance 171 Competition Outlook 117 Notes to the 30 Report of the Enterprise-wide Financial Statements Organization Growth and Risk Management Committee 236 Development 118 Information on 33 Risk Management Reference Persons Capital Structure 120 237 35 Internal Control Company Information Management Structure 122 241 Report of the Audit Committee Awards and Achievements Annual Report 2013 Vision “Greenergy Excellence” Creating an energy business that is environmentally friendly for sustainable development Value Statement B - Beyond Expectation C - Continuing Development P - Pursuing Sustainability Mission Stakeholder Shareholders / business partners / customers / creditors Conduct business to steadily grow its returns in a fair manner Society / Community / Environment Promote a business culture that is responsible to the environment and society Employees Grow employees into professionals Business Culture Develop sustainable business, while safeguarding environment and society Employee Culture To be virtuous, knowledgeable, and contributive to society The Bangchak Petroleum Public Company Limited Annual Report 2013 Message from the Chairman Established in 1984 as a secure Thai company engaged As for its contribution to improving Thais’ lives, in the petroleum business for the common good, Bangchak Bangchak’s policy is to foster a Green Society through Petroleum Pcl is determined to contribute to a higher standard establishing an organizational model, ranging from Green of living for Thais. Today the Board, the management, and Process to Green Products, and onto a Green Network employees are as committed to this goal as ever, evident that encompasses all stakeholders. A policy for sustainable in the corporate vision and missions, as well as its business business development in tandem with environmental and and employee cultures. social development has been defined for Bangchak and its Businesswise, Bangchak greatly values safety in subsidiaries to continually implement as part of the “CSR parallel with social and environmental responsibility. Our in Process”. This policy underscores sustainable business complex refinery has seen investment in the 3E Project conduct with due regard for society and the environment. (Efficiency, Energy, and Environment) to supplement energy Thanks not only to the united efforts of the Board, security while improving safety and environmental stewardship executives, and employees, but also to the faith and standards. To diversify income risks, Bangchak has constantly support of government agencies, the private sector, and all grown its alternative-energy businesses, whether through stakeholders - customers, business partners, the public, and its biodiesel plant, Sunny Bangchak solar farm project, or investors alike - Bangchak Petroleum Pcl has achieved its ethanol project, in harmony with the Greenergy Excellence business goals while striking a balance between business vision. Long - term investment plans have been defined, value and merit in a bid to remain Thais’ energy company as as well as a plan to accommodate the ASEAN Economic well as a strong corporate citizen. Community (AEC) in 2015 - including the expansion of the customer base and investment made to launch markets in neighboring countries’ service stations and lubricating oil markets. Concurrently, personnel capability is being honed for Bangchak’s competitiveness in the march toward ASEAN leadership. (Signed) Pichai Chunhavajira (Mr. Pichai Chunhavajira) Chairman The Bangchak Petroleum Public Company Limited Financial Highlights 2013 2012 2011 Statement of Income (Million Baht) Sales and service revenue 186,514 165,246 158,610 Gross profit (loss) 9,041 7,163 10,626 EBITDA 9,348 7,770 8,902 Profit (loss) from futures crude and product contracts 804 869 (759) Profit (loss) from foreign exchange (791) 1,092 (531) and futures foreign-currency trading Net profit 1/ 4,653 4,273 5,610 Balance Sheet (Million Baht) Total assets 72,389 70,853 61,597 Total liabilities 37,408 38,530 31,717 Shareholders’ equity 34,981 32,323 29,879 Share capital - Registered share capital 1,532 1,532 1,532 - Issued & fully paid-up share capital 1.377 1,377 1,377 Financial ratios (%) EBITDA / sales and service revenue 5.01 4.70 5.61 อัตราส่วนกำาไรสุทธิ Net profit / sales and service revenue 2.54 2.60 3.55 Rate of return on assets2/ 9.39 8.99 11.72 Debt with interest payable to equity3/ 0.60 0.59 0.63 Operating outcomes per share (Baht) Net earnings per share 3.38 3.10 4.24 Book value per share 25.22 23.34 21.59 Note : Consolidated financial statements 1/ Net profit (loss) for the owners of the Company 2/ Change in calculation method for the rate of return on assets from those in Annual Report of 2012. Now it is based on the formula of Financial Ratios according to the SET Manual Guides. Return on Assets (%) = EBIT (Yearly) / Total Asset (Average) 3/ Only the equity of the owners of the Company Annual Report 2013 Business Description A leading Thai petroleum company that imports crude oil from the Middle East, the Far East and indigenous sources and refining it into products with a maximum crude-processing capacity of 120,000 barrels per day, Bangchak Petroleum Plc operates more than 1,000 service stations under the trademark and has grown its businesses to new ones both related and unrelated to its current business) to add value and diversify its income-related risks. For the most part, the Company’s complex refinery produces high-value gasoline and diesel products. Gasoline, gasohol, and diesel supplied by Bangchak’s refinery all meet the EURO IV quality specifications set by the public sector. Bangchak was the first Asian company to come up with EURO 5-standard E20 gasohol with less than 10 ppm in sulphur content, a five-fold reduction from that under the Euro 4 standard. In addition, the refinery is highly energy-efficient, thanks to the purchase of power and steam from a cogeneration power plant (an investment by PTT Plc) and to the use of clean-burning natural gas to power its processes in place of low-sulfur fuel oil. Refinery Business Nameplate 120,000 bbl/day capacity Marketing Business Clean Energy Business Clean Energy Business Green Energy Business The Bangchak Petroleum Public Company Limited Most refined products are sold directly to other oil traders via several transportation modes, such as pipeline (Fuel Pipeline Transportation Co., Ltd.), marine or roads while the rest is exported. More than 80% of the refined products are sold directly to consumers through the Company’s own nationwide network of service stations. This retail network consisted of 457 standard service stations and 617 community service stations (as of 2013) with direct distribution to users in the transportation, aviation, shipping, construction, industrial and agricultural sectors. Bangchak service stations focus on selling green alternative fuels, including Gasohol 91, 95, E20, and E85 and biodiesel-based SuperPower D, and serves customers with supplementary businesses on their compounds. These businesses include the sale of consumer products at Bai Chak and Lemon Green shops, and cooperation with Big C Supercenter Plc in launching Mini-Big C convenience stores at larger service stations located close to communities, with a variety of goods. Bangchak service stations also house a service center for maintaining and changing lubricating oil and for car wash, collectively known as the Green Series, namely Green Auto Service, Green Serve, Green Wash the Premium, Green Wash Auto Care, and Green Tire. Finally, they house Inthanin Coffee, which is now found at service stations and leading educational institutions, and are expanding to various key commercial locations. Today, 17 Bangchak service stations sell NGV as an option for consumers.