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CFO and Corporate Sustainability
คณภทรลดา สงาแสงบมจ. ไทยออยล (TOP)
CFO and Investor Relations, Sustainability issues
New hope for corporate : sustainability Corporate value under the sustainability schemes Listed companies’ quality under the Sustainable Stock Exchange
(SSE) worldWhat CFO should do in the mega trend of sustainability Beyond sustainable corporate : social enterpriseWorkshop / Case study
3
Outline:
New hope for corporate : sustainability Corporate value under the sustainability schemes Listed companies’ quality under the Sustainable Stock Exchange
(SSE) worldWhat CFO should do in the mega trend of sustainability Beyond sustainable corporate : social enterpriseWorkshop / Case study
4
Outline:
เดอนตลาคม ป 2554 น าทวมใหญกระจายในทกภาคของประเทศไทย รวมกรงเทพมหานคร ทวมหนกสดในรอบ 70 ป
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วนท 11 มนาคม 2554 หลงเกดเหตแผนดนไหว 8.8 รกเตอร ท าใหเกดคลนสนาม เมองโอนาฮามะ ประเทศญป น
16 มนาคม 2555 ภเขาน าแขงละลายทแอนตารกตกา
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Sustainability Mega Forces
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Sustainable development is development that meets the needs of present without compromising the ability of future generations to meet their own needs.
World Commission on Environment and Development. Our Common future. Oxford.
Sustainability is…….
12ISO 26000 Guidance on social responsibility. First edition 2010-11 -01 . P.9
A business approach that creates a long-term shareholdervalue by embracing opportunities and managing risks deriving from economic, environmental, and social developments
Sustainability is…….
Nestle
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Our aim is to meet today’s needs without compromising the ability of future generations to meet their needs, and to do so in a way which will ensure profitablegrowth year after year and a high level of returns for our shareholders and society at large over the long-term.
(Almost 150 years)
Unilever
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Unilever has a simple purpose – to make sustainable living commonplace.
In a volatile world which is facing environmental change and rising populations, we see this as the best long-term way for us to grow and bring benefits to all our stakeholders. To succeed in this goal, we need to change the way we do business and to scale up the impact on the issues that matter most.
By Paul Polman, Unilever CEO
(Since 1885)
SCG
Sustainable Development in SCG context means conducting business in harmony with economy, society, and environment.
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(Since 1913)
PTT Group
กลม ปตท. มงมนเปนผน าในการด าเนนธรกจตามแนวทางก ารพฒนาอยางยงยน ดวยก ารสรางความเชอมนตอผมสวนไดสวนเสยผานการด าเนนงานทเปนเลศ โปรงใส และมการพฒนานวตกรรมอยางตอเนอง เพออนาคตทยงยนของสงคมและสงแวดลอม
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(Since 1978)
New hope for corporate : sustainability Corporate value under the sustainability schemes Listed companies’ quality under the Sustainable Stock Exchange
(SSE) worldWhat CFO should do in the mega trend of sustainability Beyond sustainable corporate : social enterpriseWorkshop / Case study
17
Outline:
18
Sustainability Drivers
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How sustainability mega forces impact to business
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Why Stakeholder Engagement?
Sustainable development provides both tangible and intangible benefits
IntangibleTangible
Achieving and maintaining cost competitiveness/operational excellence/energy efficiency
Focusing on health, safety, employee wellness, and environmental
conservation
Balancing portfolio of businesses to sustain through business cycles
Balancing between product demand & supply
Balancing stakeholder interests; extends to community, vendors,
customers, investors, etc.
Strengthening reputation/brand image in relation to Sustainable
Development
Building stakeholders’ ‘trust’
Embedding Sustainable Development into management systems, processes, and culture
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การด าเนนธรกจอยางย งยนของเครอไทยออยล
วสยทศนพนธกจและคานยมองคกร
To be in top quartile on performance
and return on investment
To create a high-performance
organization that promotes teamwork,
innovation and trust for sustainability
To emphasize good Corporate
Governance and commit to Corporate
Social Responsibility
Values“A leading fully integrated refining
and petrochemical company in
Asia Pacific”
Vision
Mission
Top quartile
ROIC & Growth
Top quartile
Benchmarking
performer
VISION Measurement
Value
เครอไทยออยลก ำหนดให ‘กำรพฒนำอยำงยงยน’ เปนหนงในตวชวดควำมส ำเรจของวสยทศน
อกทงยงเปนหนงในพนธกจและคำนยมองคกร
INITIATIVE
SOCIAL RESPONSIBILITY
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นโยบายการบรหารจดการความย งยน
ประกำศ ‘นโยบำยกำรบรหำรจดกำรควำมยงยนของเครอไทยออยล’ ตงแตป 2556
เครอไทยออยล มงมนเปนผน ำในกำรด ำเนนธรกจตำมแนวทำงกำรพฒนำอยำงยงยน ดวยกำรสรำงควำมเชอมนตอผมสวนไดสวนเสยผำนกำรด ำเนนงำนทเปนเลศ โปรงใส และมกำรพฒนำนวตกรรมอยำงตอเนอง เพออนำคตทยงยนของสงคมและสงแวดลอม ตำมกรอบกำรบรหำรจดกำรใหเปนแนวปฏบตไปในทศทำงเดยวกน ตำมมำตรฐำนสำกล โดยมนโยบำยกำรด ำเนนงำน ดงน
ขอ 1 ค ำนงถงกำรรกษำควำมสมดลทงทำงดำนเศรษฐกจ สงคมและสงแวดลอม รวมถงผมสวนไดสวนเสยทกฝำย ในกำรด ำเนนงำนเพอกำรเตบโตอยำงยงยนของธรกจ ขอ 2 ลดผลกระทบจำกกำรด ำเนนงำนตลอดหวงโซคณคำ ไปพรอมกบกำรเตบโตทำงธรกจ โดยครอบคลมมตดำนสงคม สงแวดลอม อำชวอนำมย และควำมปลอดภย ขอ 3 พฒนำกลยทธกำรเตบโตทเปนมตรตอสงแวดลอม โดยใหควำมส ำคญตอเศรษฐกจและสงแวดลอมทยงยน ขอ 4 สงเสรมกำรพฒนำนวตกรรมและเทคโนโลยในกำรด ำเนนงำน เพอสรำงอนำคตทยงยนขอ 5 เปดเผยผลกำรด ำเนนงำนดำนควำมยงยนอยำงโปรงใส ตำมแนวทำงมำตรฐำนสำกลทไดรบกำรยอมรบเพอใหเกดกำรพฒนำอยำงตอเนอง
ทงน กรรมกำรบรษท ผบรหำร และพนกงำนเครอฯ ทกคน มหนำทสนบสนน ผลกดน และปฏบตใหสอดคลองกบนโยบำยและกรอบกำรบรหำรจดกำรควำมยงยนทก ำหนดน
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กำรพฒนำอยำงยงยนอยในมมมองกลยทธองคกรในทกดำน
มมมองดานการพฒนาอยางย งยน
เปาหมายการด าเนนธรกจอยางย งยน
“TRUSTED & SUSTAINABLE”COMPANY
เครอไทยออยลก ำหนดเปำหมำยในกำรเปนองคกำรทไดรบกำรเชอถอและสำมำรถด ำเนนธรกจอยำงยงยนทงในระดบประเทศและเอเซยแปซฟค
เศรษฐกจ
สงคม สงแวดลอม
สรำงสมดลดำนเศรษฐกจ สงคมและสงแวดลอม
มงเนนกำรเตบโตทำงธรกจโดยค ำนงถงคณภำพชวตของชมชนและสงคม ตลอดจนกำรใชทรพยำกรธรรมชำตใหเกดประโยชนสงสด
สรำงกำรมสวนรวมของผมสวนไดสวนเสยทกกลม
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โครงสรางการบรหารจดการความย งยน
ใชกลยทธกำรจดกำรแบบกระจำยควำมรบผดชอบสทกหนวยงำน มหนวยงำนกำรจดกำรควำมยงยนท ำหนำทก ำหนดกลยทธ ตดตำมและรำยงำน รำยงำนตอคณะกรรมกำรก ำกบดแลกจกำรทกไตรมำส ป 2558 อยใตสำยงำนกลยทธเพอขบเคลอนกำรพฒนำอยำงยงยนใหอยใน กลยทธธรกจ
28
Business Value Creation
Positive ImpactsIncreased Revenue,
Business Opportunities
A LEADING FULLY INTEGRATED REFINING &
PETROCHEMICAL COMPANY IN ASIA PACIFIC
Reduced costs
To be in top quartile on performance and return on investment
To create a high-performance organization that promotes teamwork,
innovation and trust for sustainability
To emphasize good Corporate Governance and commit to
Corporate Social Responsibility
Mission
Value
Reduced Risks
Sustainability Initiatives
29
TOP Sustainability Journey 2009-2015
ควำมภำคภมใจในกำรบรหำรจดกำรควำมยงยนของไทยออยล เมอเทยบในกลมอตสำหกรรม
พลงงำนทวโลก ไทยออยลไดรบกำรจดอนดบใหเปน ‘ผน ำกลมอตสำหกรรมพลงงำน’
จำก DJSI 2014-2015
30
Announced on September 10th, 2015
Member of DJSI Emerging Markets 2015 Leader of Energy Industry Group (incl. O&G Producer)
NO.
in ENERGY industryaround the WORLD(Industry Group Leader)
NO.
in Oil & Gas ProducersWorldwide
(Industry Leader)
Member of DJSI Emerging Markets for consecutive years 3
For 2 consecutive years
For 2 consecutive years
New hope for corporate : sustainability Corporate value under the sustainability schemes Listed companies’ quality under the Sustainable Stock Exchange
(SSE) worldWhat CFO should do in the mega trend of sustainability Beyond sustainable corporate : social enterpriseWorkshop / Case study
31
Outline:
32
Co-organized by:
Stock exchanges are invited to make a public commitment to promote sustainability in their markets, thereby becoming a Partner Exchange.
To become a Partner Exchange, we ask that your exchange publicly endorse the following statement:
We voluntarily commit, through dialogue with investors, companies and regulators, to promoting long term sustainable investment and improved environmental, social and
corporate governance disclosure and performance among companies listed on our exchange.
SSE Partner Exchanges
33
SET joined since July 2014
As statement …“We voluntarily commit, through dialogue with investors, companies and regulators, to promoting long term sustainable investment and improved environmental, social and corporate governance disclosure and performance among
companies listed on our
exchange.”
Listed Companies’ Quality : Global Sustainability
34
Organization Guideline& Standard
Recognition & Benchmarking
Listed Companies’ Quality : Sustainability in Thailand
35
Thai Organization
Applied Guideline
& Standard
Recognition & Benchmarking
New hope for corporate : sustainability Corporate value under the sustainability schemes Listed companies’ quality under the Sustainable Stock Exchange
(SSE) worldWhat CFO should do in the mega trend of sustainability Beyond sustainable corporate : social enterpriseWorkshop / Case study
36
Outline:
How sustainability expand CFO roles?
37
As sustainability factors are incorporated into investment analysis, companies have started to view environmental and social initiatives as contributing directly to their economic performance.
Specifically, these trends are changing the CFO’s role in three critical areas: Investor relations (IR) External sustainability reporting and assurance Operational controllership and financial risk management
Also explore:Five actions CFOs can take now to enhance corporate value through sustainability
Source : Ernst & Young
Investor relation and sustainability
38
Banks, insurance companies, private equity funds and other institutional investors are now considering the sustainability rankings of the companies in which they invest.
Actions to consider
Develop a sustainability story for your organization.
Learn about the sustainability rating agencies to prioritize ratings most vital to your
organization.
Pay attention to sustainability-related shareholder concerns and advise on which
issues to pursue.
Take preemptive action on sustainability issues - act rather than being forced to
react.
Source : Ernst & Young
External sustainability reportingand assurance
39
Transparent reporting of sustainability performance is important, and not just to investors and ratings agencies.
Evaluating the return on investment of potential capital expenditures and reporting on their bottom-line impact requires the attention of the CFO’s finance team.
Actions to consider
Think of sustainability issues when contemplating significant capital expenditures.
Evaluate the benefits of including sustainability information in financial reports.
Push for transparency in sustainability performance and obtain third-party
assurance for external reports.
Watch for inconsistencies in sustainability communications across all channels to
minimize the need for restatement.Source : Ernst & Young
Operational controllership and financial risk management
40
CFOs will need accounting systems that track any sustainability-related events that are significant from a financial reporting perspective. The line between accounting records and sustainability records has begun to blur — sustainability activities must now be treated like financial activities, with a controller to monitor and account for them.
Actions to consider
Start analyzing any data that contributes to your company's environmental impact.
Create statistical models that help you quantify the cost of these disparate data
points.
Keep up with impending environmental regulation and impacts to your supply and
distribution chain.
Source : Ernst & Young
Five actions CFOs can take nowto enhance corporate value
through sustainability
41
As they do, their finance functions will become more deeply involved in decisions surrounding sustainability initiatives. The changing landscape means that sustainability, and the accounting related to it, have begun to resemble a new business function being rolled out to the overall accounting organization.
1 Actively pursue a sustainability and reporting program.
2 Ensure that those responsible for sustainability matters do not operate in isolation from the rest of the enterprise — especially the finance function.
3 Enhance dialogue with shareholders and improve disclosure in key areas, particularly those related to social and environmental issues.
4 Ensure that directors' skills are relevant to the chief areas of stakeholder concern, including risk management tied to social and environmental matters.
5 Consider using nontraditional performance metrics, including those related to environmental/sustainability issues.
Source : Ernst & Young
New hope for corporate : sustainability Corporate value under the sustainability schemes Listed companies’ quality under the Sustainable Stock Exchange
(SSE) worldWhat CFO should do in the mega trend of sustainability Beyond sustainable corporate : social enterpriseWorkshop / Case study
42
Outline:
Social Enterprise
A business driven by social and/or environmental purpose. They are trading organizations (their main income streams are revenues for goods and services provided, not grants or donations).
Successful social enterprises generate surpluses or profits which are reinvested towards achieving their social mission.
43
Social Enterprise
44
Ways to Invest in Social Enterprise
45
venture philanthropy, venture capital, impact investment, socially responsible investing, corporate partnership / hybrid value chain, crowd funding and social impact bond, and others.
WORKSHOP / CASE STUDYCFO and Corporate Sustainability
46
47
Q & A
TOP Case Study – BEST Strategy
48
Strictly Confidential
53 Years : A Long Track Record of Success
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Revenue
HCU-1 (90 kbd)
1964 20121986
CDU-1 (35 kbd) 1964
CDU-1/2 (65 kbd) 1970
1989
• Buy back TOC1/2
• Diversification program
CDU-3 / CCR (205 kbd)
CDU Revamp (220 kbd)
1992
1993
1994
Development & Revenue Growth
Upgrading + Expansion + Diversification + Oil Price
Expanded capacity from 35 kbd(1964) to 275 kbd (Today)
Production growth to support Thailand GDP
Diversified into aromatic, lube base, power, marine & solvent to solidify profitability
1961 – 1997 Capacity expansion and initial stage of business
diversification
2004 – 2012Listing, expansion and
diversification
Today A leading integrated refining and
petrochemical group in Asia Pacific
IPO
Restructuring
CDU-3 revamp (275 kbd)Diversification (Solvent, Ethanol, Marine)
2000
2004
2008
2011EURO 4 & TDAE
2012PX-MAX
2013LABIX / TOP SPP
พอประมาณ
มเหตผล มภมคมกน
ชวต / เศรษฐกจ / สงคม
สมดล / พรอมรบตอการเปลยนแปลง
เง อนไขความร รอบร
รอบคอบ ระมดระวง
เง อนไขคณธรรมซอสตย
สจรต ขยนอดทน แบงปน
พอประมาณ : ท าในสงทเหมาะสมกบศกยภาพของตนเอง
มเหตผล :เปนประโยชน มผลตอบแทน มความยงยน
มภมคมกน : การบรหารความเสยง
การด าเนนธรกจ
• มงเนน Op Ex
• Reliability
• Safety
• Energy Efficiency
• ดแลสงแวดลอม
สรางธรกจ
กลยทธในการเตบโต
• ท าในสงทเชยวชาญ
• ท าในสงทยงยน
• หาพนธมตรรวมทน
• มการบรหารความเสยง
• ก ากบดแลกจการ
สรางคน
แนวทางการประยกตปรชญาของเศรษฐกจพอเพยง
1/1
2/7
Key Achievement
Regional Leader of eco-industry in O&G
2020+
Where are we now
• Top 15% of DJSI (ROBECOSAM)
• GRI level A
2013
นโยบาย เปาหมายและกลยทธดานความรบผดชอบตอสงคม
Sustainability Managementอยในระบบปฏบตการของบรษท (OEMS)
Co-creation with Customer
Product
• Quality
Service
• E-ordering system• E-payment• New Lorry Loading
Customer Satisfaction
2555
2/7
การด าเนนงานความรบผดชอบตอสงคมขององคกร: สนคาและบรการ
การด าเนนงานความรบผดชอบตอสงคมขององคกร: พนกงาน
Organization Health Index
TOP adopted OHI improvement initiatives focus on
Inspire
Trust
Care
พดตรง
รบฟง
มอบความไววางใจ
FAIR | ENCOURAGING | TRUSTED
Direction
Culture &
Climate
Coordination
& Control
Accounta-
bility
Capabilities Motivation
LeadershipExternal
Orientation
Innovation
& Learning
การน าระบบ OHI มาใช
โดยมงเนนดานการพฒนาสขภาพองคกร
1/7
Alignment Execution Renewal
Business Excellence and Sustainability Task Force (BEST)
Strictly Confidential
Speed Up Execution Transform
• Operational Excellence
•Profit Recovery Plan
A Leading fully integrated refining andpetrochemical company in Asia Pacific
Vision
Group Value
Core Strategies
FinanceManpower readiness Process/System
Vision Measurement
• Organic growth
• AEC / Logistic & B2B
• Integrated Downstream & Specialty
• SD/R&D
• OHI
•Future Business
Top quartile performer
Top quartile ROIC & Growth
Sustainability
WA
YEN
D
Enables
MEA
N
TOP GET BEST
58
Megatrends
Strictly Confidential
Global Forces shaping the Future
59
3 Global Forces molding the future
Changing
demographics
▪ Absolute population growth
▪ Asymmetric shifts of the age pyramid
▪ Globalization of businesses & economies
▪ Shifting of GDP and political power
▪ Population moves from rural to urban areas
A
Experiencing
Earth's limits
▪ Energy resources scarcity
▪ Base Resources scarcity
▪ Water and food scarcity
▪ Limits of natural capacity to buffer pollution``
c
Proliferating
knowledge and
technology
▪ Ease of knowledge creation and
dissemination
▪ Exponential advancement of technological
evolution
▪ Interconnectivity and technology adoption
B
Three global forces are shaping 12 megatrends
Changing
demo-
graphics in a
multipolar
world
Experiencing
Earth's limits
Prolifera-
ting know-ledge
and technology
▪ Growing life sciences and healthcare
▪ Changing social values
▪ Emerging new consumers
▪ Continuing urbanization and the rise
of megacities
▪ Increasing link of world economies
▪ Increasing weight of public sector
▪ Shifting centers of economic activity
▪ Faster dissemination and adoption
of technology
▪ Commoditization of knowledge and
increasing ease of knowledge creation
▪ Accelerating green economy
▪ Entering a 2nd agricultural revolution
▪ Growing infrastructure congestion
1
2
3
4
5
6
7
8
9
10
11
12
60
Strictly Confidential
Changing demographics in a multipolar world
61
A
Mega-trend Definition
Growing life sciences and healthcare
Growth in healthcare expenditure will significantly outpace GDP and will be driven by aging population, increasing wealth and technological innovation
1
Changing social values Convergence to political and economic freedom models with rising individualism and increasing non-traditional households
2
Emerging new consumers
Over the next 10 years, the number of global, upper middle, and middle class households will increase by ~80%
3
Continuing urbanization and the rise of megacities
Urbanization is progressing rapidly, is particularly prevalent in developing countries and will cause a doubling of megacities over the next 1-2 decades
4
Increasing link of world economies
While global trade will continue its upward trajectory, there will be growth
in international capital flows and increasing importance of intra-regional and
inter-emerging market flows
5
Increasing weight of public sector
Government financial exposure is expected to increase further in both developed and developing countries
6
Shifting centers of economic activity
Emerging countries will be the engine of economic growth in the next decade with increasing financial market influence and strongly contributing to private consumption
7
Strictly Confidential
Faster proliferation of knowledge and technology and Experiencing Earth's limits
62
B C
Mega-trend Definition
Faster dissemination and adoption of technology
Incremental evolution of technology shows exponential advancement with technology dissemination and adoption being increasingly fast and shorter product lifespans
8
Commoditization of knowledge and increasing ease of knowledge creation
Creation and dissemination of knowledge is increasingly easy with added complexity of value creation from knowledge
9
Accelerating green economy
As physical and psychological space for pollution and waste is diminishing, governments’ and consumers’ changing mindsets and behaviors are driving companies to develop environmental solutions for consumers and reduce negative environmental impact
10
Entering a 2nd agricultural revolution
Demand for agricultural products may double in the next 20 years with a massive increase of agricultural productivity being necessary to meet the demand
11
Growing infrastructure congestion
Worldwide demand for transport infrastructure is growing rapidly with infrastructure is becoming increasingly congested as supply struggles to keep pace with demand
12
63
Technology Trends
Strictly Confidential
Disruptive Technologies
64
Disruptive technologies will have enormous impact by 2025
0.1–0.5
0.2–0.3
0.2–0.5
0.2–0.6
0.1–0.6
0.7–1.6
0.2–1.9
1.7–4.5
1.7–6.2
2.7–6.2
5.2–6.7
3.7–10.8
Use of computer hardware and software resources delivered over a network or the Internet, often as a service
Networks of low-cost sensors & actuators for data collection, monitoring, decision making, & process optimization
Intelligent software systems performing knowledge work tasks involving judgment
Inexpensive and capable mobile computing devices and Internet connectivity
Increasingly capable robots capable of automating tasks or augment humans
Vehicles capable of operating with reduced / no human intervention
Fast, low-cost gene sequencing, advanced big data analytics, and synthetic biology
Devices or systems that store energy for later use
Additive manufacturing techniques to create objects by printing layers of material based on digital models
Materials designed to have superior characteristics or functionality
Exploration and recovery techniques that make extraction of unconventional oil & gas economical & enhancing recovery of conventional fuels
More cost-effective production of solar photovoltaic & wind energy drives adoption by both industries and commercial users
Assessed for impact, reach and rate of change$ trillion, annual
Renewable energy
Advanced oil & gas exploration & recovery
Advanced materials
Energy storage
Mobile Internet
Automation of knowledge work
Internet of Things
Cloud technology
Advanced robotics
Autonomous and near-autonomous vehicles
Next-generations genomics
3D printing
Source: Disruptive Technologies report, McKinsey Global Institute, 2013
Range of sized potential economic impacts
Low High
X–Y
65
Step Out Ideas (STS2012)
Strictly Confidential
Brainstorming generated over 90 business ideas in Y2012
66
Refining and chemicals1. Additives into gasoline, diesel2. Bitumen end-products3. Catalyst producer4. CO2 to chemicals5. Convert BZ to high value aromatic products e.g. PX
and MX with new technology6. Convert heavy fuel oil to lighter7. Converting Naphtha to petrochemicals8. Detergents9. Distillate end products (including paraffin wax)10. Green refinery (Combined petroleum / bio
feedstock, e.g., UOP)11. Group 1 LBO replicate to other countries12. Heavy oil to olefin (C3, C4, C5, C6)13. JV with NOC14. Leverage current refinery technology (e.g. M&A
UOP, build pilots for new technology)15. Lifetime lubricant16. New refinery + petchem + power in new geography
(Myanmar, Indonesia)17. Shingle roof from Asphalt modification18. Sulphur monetization19. Unconverted oil / HC20. Water-based solvent21. White oil from Lube Base Oil Group I or III
Power generation (cont’d)32. Clean coal power plant33. Coal gasification34. Hydropower plants overseas (Myanmar, Laos)35. Nuclear power plant36. Power plant (conventional) - gas37. Solar power (across value chain)38. Thermal coal power plant39. Wave/tidal power40. Wind offshore
Bio energy and products (cont’d)62. Biofuel from unconventional feedstock (incl 3G,
4G)63. Integrated sugar/starch plantation to Ethanol64. Biomass power generation (incl. biogas)65. Bio-refinery (integration)66. Convert ethanol to chemical67. Medical bioplastic (incl. organ implants)
Consumer market68. "Green" Convenience store69. Airlines70. Banking/financial services71. Cosmetics72. Entertainment complex (e.g. casino)73. Health services, including hospitals74. Hotel75. Information technology web-based business76. Mobile phone77. Nutrition - energy for humans78. Pharmaceutical 79. Refinery to liquor (alcohol)80. Restaurant81. Hypermarket
Oil and gas logistics/infrastructure22. Gas station23. Hub station - crude from Thailand to Burma24. LNG shipping25. Logistics - ASEAN focus26. Logistics - Oil terminal for trading27. Logistics - Shipping (dry/liquid)28. Pipeline builder (oil and gas)29. Trading
Engineering and Construction41. Construction engineering42. Green industrial complex developer, incl. CCS43. Infrastructure developer for alternative tech44. Ocean technology ‒ Floating city45. Real estate developer (including landowner for
solar/wind)46. Ship building/ floating storage47. Underground city
Transportation48. Automotive parts manufacturer49. Coal to Liquid technology50. Electric vehicles51. Floating cars (magnetic)52. Gas to liquid technology53. H2 cell energy from water54. ICE energy efficiency55. Transportation (mass)56. Tyre for vehicles
Others82. Advanced engineering and construction materials
(high performance)83. Consulting services (Ops excellence, ) to emerging
markets (ID, MYR)84. Energy software85. Manpower supply in AEC86. Material recycling87. Nanotechnology88. Raw materials - rareearths89. Smart grid90. Steel producer (steel plant)91. University of energy92. Water management (e.g. desalination technology)
Power generation30. "Cleantech" energy provider31. Charcoal, torrefaction
Bio energy and products57. Bio-based lube oil58. Biochemical59. Biodiesel from palm oil/soy60. Biofuel from biomass61. Biofuel from non food crops
67
Bio-energy and products
There are 4 themes emerging from 16 step-out ideas
SOURCE: ThaiOil Step-out brainstorming workshop April 10, 2012; McKinsey analysis
Step-out ideas
Transportationinnovations
Renewable power generation
1 Across value chain2 Myanmar and Laos
Conventional energy
Discussed today
To be discussed on May 10
Part of top 30 ideas from workshop
Biofuel▪ Integrated sugar/starch plantation to Ethanol▪ Biodiesel from palm oil/soy▪ Biofuel from non food crops▪ Biofuel from biomass▪ Biofuel from unconventional feedstock (incl 3G, 4G)
1
3
2
4
5
Biopower▪ Biomass power generation
Biochemical▪ Convert ethanol to chemical▪ Biochemical
Biohub (integration)
6
7
8
▪ Solar power1
▪ Hydropower plants overseas2
▪ Clean coal power plant
▪ Electric vehicles1
▪ Logistics (ASEAN focus, Oil terminal for trading, Shipping)▪ Catalyst producer▪ Additives to gasoline, diesel
11
9
12
13
10
14
15
16
68
Most watchlist ideas currently have little fit with ThaiOil
SOURCE: McKinsey analysis
Mature market
Pharma-ceuticals
Water management
Cosmetics
Nutrition – energy for humans
Global market sizeUSD billions, 2010 Key success factors
Nuclear
Smart grid
Medical bioplastics
H2 cell energy from water
Early market
216
~25
707
535
304
250
7
8
Strong R&D, alliances with biotech companies and academies Strong links/contracts with distributors and health insurers Experience in healthcare regulations
High
Low
Overall fit to ThaiOil
Strong links with water utilities and government officials/agencies Equipment manufacturers to have scale and cost leadership Desalination turnkey providers and other O&M players need strong track
record of reliability and operational expertise
Access to low-cost chemical raw materials Strong R&D (cosmetic formulation) Global logistics footprint and supply chain Ability to anticipate consumer trends
Ingredient providers need strong chemical expertise and formulation know-how
Nutritionals manufacturer need strong credible reputation, science-based claims, and supply chain excellence
Niche technical expertise in uranium mining, handling / milling Strong ties with public decision makers
Strong links to utilities and existing big players (e.g., analytics) Strong knowledge of technology hardware and software
Access to raw materials, key component and production technology Infrastructure developers need strong links with stakeholders like utilities,
OEMs, government agencies
Strong in-house R&D and continuous innovation Deep knowledge of demographic trends and consumers Links with medical healthcare providers for distribution & sales
5
6
3
4
1
2
Refinery Downstream
AEC
Thailand
Organic Growth
New Market/ Geography
Myanmar, Vietnam, Indonesia
Integrated Players
Integrated Refinery
Organic
Inorganic
69
Forwarding Strategy
70
Stratgeic Risk Management
Strictly Confidential
TIM: TOP Group Investment Management
71
Strictly Confidential
Criteria for Project Prioritization
72
Category Weight
Concentration Risk 10%
Land 10%
Stakeholder Management(Focus on Social Aspect)
10%
Reliability, Operability, Maintenance, Technology
20%
Company Competency 20%
Commercial 30%
Joint Venture (If any) -
Total 100%
1. Financial return IRR
2. Qualitative scoring
73
Strategic Initiatives
1. Profitability & Performance
• Group Management/Shared Service
• Treasury• Financial Risk Management• Financial Supply Chain Management• Accounting, Tax and Insurance• Financial Performance Monitoring
• Operational Excellence
• Cost Management Committee• Shares Services to Subsidiaries
2. Funding for Growth Project
• Optimum Capital Structure & Capital Access Readiness
• Risk Management & CRAs
3. Synergy & Partnership
• Collaboration/Partnership/Newtworking
4. Stakeholder Management• TFIC DNA, Talent & Successor• Managing Expectations: Shareholders & Debt Creditors
Key drivers
External :
Global Economics
Corporate :
Strategic Investment Plan
• Core Business
• Step Out
• AEC Countries
Internal :
TOP Group Capabilities
• Fund Raising Ability
• Credit Rating
• Manpower
• Expertise
WAYEND
TOP Group Financial Intelligence Centre
(TFIC)
• To be Excellent Financial IntelligenceCenter
• To prudently managecapital structure and credit risk
• To create One-Stop Group Shared Services
Sustainable Financial Strategy
