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PTT Oil BusinessCONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of PTTPLC is strictly prohibitedMarch 29-30, 2017
| 1
Agenda
Summary of the Restructuring
PTT’s Oil Business Overview & Operating Performance
Industry Overview
PTT’s Oil Business Directions
Next Steps
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of PTTPLC is strictly prohibited
Summary of the Restructuring
|
Summary of the Restructuring
3
Restructuring
Transfer Price
IPO / Listing Venue
Minimum Shareholding by PTT
Shareholding by PTT & Government
(1) In the case that there is a loss or damage of assets on the scheduled date to finalize the list of assets and liabilities to be transferred of more than 5% of the Transfer Price, the value of such loss or damages will be used to adjust the Transfer Price down; in the case that there are agreements under which the rights, duties, and liabilities cannot be transferred to PTTOR, which have material negative effect on EBITDA, the parties agree to adjust the Transfer Price down under the terms to be mutually agreed by the parties; in the case that the Transfer Date is later than 1 July 2017, the Transfer Price will be adjusted if there is material difference between the fair market value of net assets as of the Transfer Date and the estimate of the fair market value of net assets as at 30 June 2017.
(2) In case where there is an overallotment to stabilize the share price (Stabilization) for a period of 30 days from the first trading day of PTTOR’s shares on the SET, PTT’s holding percentage in PTTOR may temporarily decrease to be lower than 45.0% of total paid-up capital in that period.
(3) Offering to PTT shareholders who have the rights to subscribe for such allocated shares. However, PTTOR will not offer such shares to shareholders who will cause PTTOR to be subject to rules and regulations of foreign countries.
Preferential Share Offering
Stock Exchange of Thailand (“SET”)
Less than 50.0% of total paid-up capital after IPO
Not more than than 5.0% of ordinary shares being offered at IPO to PTT’s existing shareholders(3)
45.0% of total paid-up capital(2)
PTT currently holds 100% in PTTOR
THB121.95bn(1)
This amount does not include operations and shares currently under PTTOR
PTT’s oil business unit including its assets and liabilities and shares of relevant companies to be transferred to PTT Oil and Retail Business Company Limited (“PTTOR”)
Maximum Shareholding by the Public
55.0% of total paid-up capital
Foreign Limit 25.0% of total outstanding shares
3.0% of the total paid-up capitalForeign Shareholding
Cap Per Person
|
Increase in PTT’s revenue from disposal of assets and PTTOR’s shares
Rationale for the Restructuring and Benefits to PTT and Shareholders
4
Realize the value of the oil and retail business reflective of its true potential as a non-state controlled business
2
Improve competitive advantage both domestically and abroad through more flexibility, united, and more efficient operation
4
Creation of a flagship company in the oil and retail business for PTT Group1
3
|
Current Group Structure of the Oil Business Unit
The transfer of the oil business unit, the assets and liabilities of the oil business unit, and the shares of companies related to the oil business unit from PTT to PTT Oil and Retail Business Company Limited (“PTTOR”)
The appointment of PTTOR as a Flagship in oil and retail business of PTT Group
The initial public offering of ordinary shares of PTTOR (1) and the listing of PTTOR on the Stock Exchange of Thailand
“The Restructuring of PTT” includes the following:
Downstream Petroleum Business Group
Upstream Petroleum & Gas Business Group
Infrastructure & Sustainability Management
Business Group
Listed CompanyPre -TransactionStructure
International Trading Business Unit
Downstream Business Group Alignment
Oil Business Unit
PTT OilMyanmar
THAPP BAFS KPL(2)PA Sanshui(2) PA Maoming(2)
TLBC IPS FPT PAT PTTCL
PTTLAOPTTRM PTTPCPTTRS PTTTC OGPS
FST
100% 40.4% 7.06% 40%25% 20%
48.95% 16.67% 0.000009% 35% 100%
100%100% 100%100% 100% 40%
100%
25% To be transferred
back to PTT
PTT transfers Oil Business Unit to
PTTOR
(1) including the offering of PTTOR’s ordinary shares to PTT’s existing shareholders who have the rights to subscribe for such allocated shares. However, PTTOR will not offer such shares to shareholders who will cause PTTOR to be subject to rules and regulations of foreign countries (Preferential Share Offering) ; (2) Awaiting to be dissolved
PTTOR
51.05%
-
5
| 6
Group Structure after the Restructuring of PTT (After IPO)
At least 45% (1)
PTTOR
(Oil and Retail
Businesses)
Infrastructure & Sustainability Management
Business Group
Upstream Petroleum & Gas Business
Group International Trading
Business Unit
Downstream Business Group
Alignment
Downstream Petroleum Business Group
Petchem/Refinery
PTTPM/ HMC/ PTTAC/
PTTPL/ SPRC/
PTTMCC
Gas & Utility
PTTNGD/ TP/
DCAP/ TTM
Services
BSA /ENCO
/PTTICT
Others
TIP etc.
(1) PTT and government agencies will hold less than 50.0% of PTTOR’s total paid-up capital after the offering of PTTOR’s shares and its listing on the SET
PTTOR
(Oil and Retail
Businesses)
PTTRM PTTRS PTTPC PTTTC
FST
100%100%100%100%
25%
PTTOMTLBC PTTCL
PTTLAO
100%100% 100%
100%
THAPP IPS FPT PAT
40.4% 16.67% 0.000009% 35%
BAFS
7.06%
PTT’s Business Unit
Flagship Companies listed in the SET
PTT Group Subsidiaries/PTT Group Joint Venture
E&P Refining Petrochemical Petrochemical Power Oil and Retail
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of PTTPLC is strictly prohibited
PTT’s Oil Business Overview & Operating Performance
|
Summary of PTT’s Current Oil BusinessFour Key Operating Segments
8(1) Data as at 31 December 2016
Oil Business(1)
Retail
Commercial (B2B)
Supply Sales
Non-oil Business(1)
7-eleven & Jiffy
Café Amazon
Master Franchise Brand
Rental Business
International Business(1)
Non-Oil
Oil
Lubricant Business(1)
Lubricant (Domestics &International)
• #1 market share in Thailand
• Export to 36 countries
21
3 4
Service station • FIT auto of 24 stations
Laos Cambodia Myanmar Philippines
• #1 market share in Thailand• PTT nationwide gas station
network of 1,530 stations
• Aviation and marine, industrial use, and LPG
• Sale to dealers under M.7 & 10
• 1,350 7-eleven in PTT gas stations nationwide
• 151 Jiffy stores nationwide
• 1,667 Café Amazon nationwide
• Space rental by high quality tenants
• 29 branches
• Gas station network of 181 stations in 4 ASEAN countries
• 50 Café Amazon • 28 Jiffy stores
•
|
Operating Performance of PTT’s Oil Business
9
Sales Volume(1)
20,762 21,80723,035 23,981 24,657 25,268
26,464
2010 2011 2012 2013 2014 2015 2016
Gross Margin per Liter(2)
0.77 0.75 0.86 0.80 0.75 0.810.99
2010 2011 2012 2013 2014 2015 2016
Source: Company presentation(1) Only include fuel sales volume that are sold by PTT. Does not include fuel sales volume by subsidiaries of PTT(2) Includes stock gain/loss. Does not include non-oil
Sales volume’s general upward trend caused by a higher demand following a decrease in product prices
Decrease in oil prices also caused gross margins to improve
Million Liters
THB / Liter
0.21Stock gain/(loss) and non recurring item:
(0.17)
|
Financial Performance of PTT’s Oil Business
10
Total Oil Business Unit EBITDA(1)
13,22415,929
13,297 11,57815,133
23,677
2011 2012 2013 2014 2015 2016
Non-Oil EBITDA(1,2)
1,251
1,8312,359
2,7503,243
3,757
2011 2012 2013 2014 2015 2016
Source: Company presentation(1) Includes EBITDA of oil and non-oil business under PTT and its domestic and international subsidiaries. (2) Non-Oil is EBITDA from operating
Fluctuation in EBITDA is mainly due to stock gain/loss as a result of movement of fuel price. However, fuel sales volume has been growing steady at CAGR of 4.1% since 2010
Non-Oil EBITDA has been growing strongly since 2011 following our strategy to expand more into non-oil business
THBmm
THBmm
5,682Stock gain/(loss):
(4,770)
(901)Aviation fuel pricing formula effect:
1,319
|
Recent Awards & Recognitions
Being recognized third years in a row since the beginning of the award from Chulalongkorn University. The results are from 16,000 survey samples from Bangkok and 13 provinces.
The Most Powerful Brands of Thailand 2016
Thailand’s Most Admired Brand
PTT gas stations were voted the Most Admired Brand for 13 consecutive years (2004 – 2016) and PTT Lubricant won the Most Admired Brand for 8 consecutive years based on a consumer survey.
Presented by BrandAge MagazineNo.1 Brand Thailand 2015-2016
PTT gas stations, lubricants, and Café Amazon (Coffee Shop) were voted the most popular brand for 5 consecutives years.Presented by Marketeer Magazine
The Americano Winner!
Café Amazon was voted the best taste Black Coffee (Americano) in Thailand from blind taste test.Presented by Time Out Bangkok Magazine.
Data Champion
PTT received “The Data Champion” award from Microsoft Asia as the pioneer in implementation of digital technology in data analytics with PTT Blue Card program. Presented by Microsoft Asia
Prime Minister’s Best Exporter2016
PTT Lubricants was presented with the PM best exporter award from its performance excellence and innovation in products & services for global export. Presented by Prime Minister of Thailand.
EIA Monitoring Award 2016
PTT Oil’s terminal operation was awarded excellence in its performance on environment. Presented by Ministry of Natural Resources & Environment.
The best performance for PTT Terminal
PTT Oil’s terminal Surajthani was recognized for its excellence in safety, security, health and environment management for 20 consecutive years.
Excellent service for PTT’s iTerminal
Presented by Office of the Public Sector Development Commission
11
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of PTTPLC is strictly prohibited
Industry Overview
|
Key Recent Developments in the Fuel Industry
14
Source: EPPO, DOEB(1) Average of ULG, Gasohol 95 (E10, E20, E85) and Gasohol 91(2) Average of LPG for cooking, industry and automobile(3) Average marketing margin of gasoline, gasohol and diesel in Bangkok
15
20
25
30
35
40
Gasoline Diesel LPG
THB / Liter
(29.0%)
2016
(14.0%)
(12.6%)
(1)
THB / Liter
1.63 1.561.40
1.631.55
1.69 1.72 1.78
2009 2010 2011 2012 2013 2014 2015 2016
Oil price decline started in 2H14
201520142013(2)
44,37346,867
49,45550,786 51,124 52,079
53,393
2010 2011 2012 2013 2014 2015 2016
Total Fuel Sales Volume (Million Liters)
Retail fuel price in Thailand has declined following the global run down
Increase in fuel consumption in the country following the Global Decline in Oil Price
Retail marketing margin has stabilized and improved since 2014 with oil price at its current level(3)
CAGR by Fuel Type 2010-2013 2014-2016
Gasoline 3.4% 11.7%
Diesel 4.2% 3.7%
Jet Fuel 5.7% 8.3%
LPG 7.9% -9.7%
|
Non-Oil Businesses in Thailand Have Demonstrated Strong Growth
15
Source: EPPO, DOEB, NESDB, Foreign Agricultural Service/USDA (1) Includes gasoline, kerosene, diesel, J.P., fuel oil and LPG(2) Includes consumption of personal and household goods as well as repair of vehicles(3) For Thailand, the marketing year for coffee starts in October and ends in September of the following year
Fuel Consumption(1)
Coffee Consumption(3)
44,373
46,867
49,45550,786 51,124
52,079
2010 2011 2012 2013 2014 2015
46,500
63,600 67,80075,600
93,000
2010/11 2011/12 2012/13 2013/14 2015/16
Million Liters
Tonnes
Wholesale and Retail Trade(2)
1,569 1,6291,777 1,796 1,867
2,046
2010 2011 2012 2013 2014 2015
THBbn
Growth in fuel consumption correlates strongly with GDP growth
Increasing number of coffee outlets and number of coffee drinkers as well as developing coffee culture have contributed to strong increase in coffee consumption
Convenience store format has expanded faster and enjoyed stronger growth compared to big box format
Expenditures on Restaurants & Hotels
312 350413
475 499587
2010 2011 2012 2013 2014 2015
Strong growth in tourism as well as changing behavior among locals to eat outside more have been driving growth for restaurants and hotels
THBbn
|
Supportive Industry Backdrop in the CLMV Region + the Philippines
16
Thailand is strategically located to expand into the CLMV region as well as the broader Southeast Asia
Cambodia
Laos Philippines
Myanmar
GDP Growth(1)
Private Consumption Growth(2)
2.9%
7.9% 7.3% 7.2%5.9%
Thailand Laos Myanmar Cambodia Philippines
4.4%
11.4%8.8% 8.1%
Thailand Laos Philippines Cambodia
2010 – 2015 CAGR
2010 – 2015 CAGR
2015 Oil Consumption / Capita (barrel/capita)
4.82
1.40 1.31 1.04 0.75
Thailand Phils Cambodia Laos Myanmar
Source: World Bank (World Bank national accounts data and OECD National Accounts data files), BMI, IMF and Company’s Information(1) At constant LCU(2) Household final consumption expenditure at current LCU
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of PTTPLC is strictly prohibited
PTT’s Oil Business Direction
| 18
Transformation of PTT’s Oil Business
From Oil Business to Retail Business
From Product-Based to Platform-Based Business
From Traditional Organization to Digital Organization
From Domestic Market to Regional and Global
|
• 1,350 7-Eleven(2)
• 151 Jiffy stores
• 1,667 Café Amazon
• Space rental by high quality tenants
• 29 branches
From Oil Business to Retail Business
19
Evolution from Oil Business to Full Service Station
• Station expansion to become the #1 player in retail gas station
• Offering products of higher quality
• Diversification into non-oil products and services
• Providing the best experience for travelers
Our Vision
(1) Includes local operations only(2) Combines PTT-owned and franchise stores(3) Non-Oil is EBITDA from operating
1
2
3
4
Gaining Oil Market Share from Other Players
19%
1% Local Oil Companies (Excluding PTT)
80%Foreign Oil Companies
Foreign Oil Companies
28%
32%
Local Oil Companies (Excluding PTT)
40%
Higher Contribution from Non-Oil(3) Snapshot of Our Current Non-Oil Businesses(1)
Year 1978
Dec 2016
EBITDA (In THB bn)
Phase 1Network
Expansion
Phase 2Product
Differentiation
Phase 3Service
Differentiation
Phase 4Experience
Differentiation
9.5% 15.9%
Expansion of Product and Service Offerings
Enhanced Loyalty Program
• PTT Blue Currency• Partnership / coalition program
Personalized MarketingBig Data Analytics
Where We Are 2.8 3.2 3.8
8.8 11.3
19.9
2014 2015 20162011 2016
Non-oil EBITDA from operating compared to PTT OIL’s EBITDA
Oil
Non-oil(3)
|
From Product-Based to Platform-Based Business
20
Transforming from a product-based business to a platform-based business to better serve customers
(1) Based on local operations only
Focused Offerings
Focus on selling oil and related products
Lifestyle station / one-stop destination with various product and service offerings
Our Station Then(1) Our Station Now(1)
Limited Offerings Highly Diversified Offerings
Only oil and related products
Simple Gas Station Platinum and Park Format Standard Format Compact and City Format
Smaller format to service underserved area and secondary
roads.
Our mainstay format with diversified
offerings for travelers
Diversified Offerings
QSR Financial Service
1
|
1,308 1,326 1,352 1,381 1,396 1,450 1,530
2010 2011 2012 2013 2014 2015 2016
COCO DODO
From Product-Based to Platform-Based Business (Cont’d)
21
Expansion Through Our Successful Business Platform and Our Partnership Model
(1) Based on local operations only.
538633
776
989
1,182
1,411
1,667
2010 2011 2012 2013 2014 2015 2016
PTT-Owned Franchise
2
Growth in PTT’s Gas Stations(1) Growth in Amazon Café(1)
143 Shops Space for Farmers to Sell Rice in c.700
Stations
Shops for Local Souvenirs in 148
Stations
Becoming a Part of Local Community to Service Them Closely3
17% 17% 16% 16% 17% 16% 17% 2% 3% 3% 4% 6% 7% 10%
|
From Traditional Organization to Digital Organization
22
CurrentData Analytics for Better Customer Experiences
Better Customer Insights
Effective Marketing and CRM Campaign
Partner’s Competitiveness Enhancement
Operational Excellence
New Business Development
Next StepsDigital Organization
Allows fleet cars to drive in and fill up their tank without physical financial
transaction
Fill and Go RFID Technology
Data integration through internal softwares and
external venues via social media and
website
Smart Analytics
Gas station automatically
requests a refill truck upon sensing oil level below a certain level
Auto Filling System
Customer service through e-Order, e-Billing, e-Payment,
and Direct Approved systems consolidating customer data for call
center associates
Customer Service
Sales of lube products on Lazada +
intelligent inventory management system
for increased efficiency
Lube Initiatives
• Cross selling + coalition programs
• Sources for customer analytics
~2mm Card Holders
Blue Card Loyalty Program
Phase 1 Foundation
Phase 2 Expansion
Phase 3 Optimization
Phase 4 Monetization
Technology in Use Both at Customer Touch Points and Back Office
Becoming More Customer Centric With Big Data Analytics
|
From Domestic Market to Regional and Global
23
Becoming a Regional Player Spearheaded by Our Own Brands
Our International Footprint Has Been Growing Steadily
7280
103 124 150 1811 615
26
50
1 610
19
28
2011 2012 2013 2014 2015 2016
Stations Amazon Jiffy
Strong Regional Footprint with Global Presence (as of 31 Dec 2016)
Myanmar
9 1
Thailand
1,5301,667
1,350 151
Cambodia
2826 9
Laos
32 21 19
Philippines
1121
Japan
1
International Operations
181
50
28
36 countries
Total branches 5-Yr CAGR: 29.5%
# of Branches
Vietnam
New Zealand
Philippines
Laos
Cambodia
Myanmar
Pakistan
Greece
Nigeria
China
Hong KongTaiwan
JapanKorea
Bangladesh
Lebanon
India
Angola
Malaysia
Singapore
BahrainIsrael
Ethiopia
RomaniaUkraine
Macau
Maldives
Malta
Australia
Togo
Morocco
Iraq
Brunei
UAE
Indonesia
Jordan
= Countries Where PTT Export Lube To
|24
The New Growth Engine
International BusinessNon-Oil RetailsDomestic Oil
Cash cowWell-oiled machine
A Platform for next wave of growth
#PTTOR the future is now
Key Takeaways
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of PTTPLC is strictly prohibited
Next Steps
|
Next Steps
26
Restructuring Phase IPO Phase
BoD meeting (17 Mar 2017)
PTT Shareholder
Approval (28 Apr 2017)
PTTOR Shareholder
Approval
Execution of Restructuring / Transfer of
Assets & Liabilities
Precedent Conditions
Key Registration and Approval for the IPO
Preparation for the IPO
SEC permission to offer newly issued shares to the public
SET approval for the listing of PTTOR on the SET
PTT and/or PTTOR obtaining any approval / consent necessary for the restructuring of
PTT from relevant governmental authorities or agencies
PTTOR obtaining material licenses and permits to operate its business
Relevant government authorities granting PTTOR the right to use the state assets in
accordance with the criteria and procedures as prescribed in PPP Act and PTT has
complied with and completed all the requirements and procedures under the PPP Act
Material inter-company agreements are executed by relevant parties
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of PTTPLC is strictly prohibited
Appendix
|
Petroleum Price Structure in Bangkok
28Source: EPPO
Data as of 23 Mar 2017(THB/Liter)
14.89 15.97 15.73 17.0522.23 15.13
15.91
8.77 8.75 4.54
-6.76
8.36
2.86
1.81 1.80
2.453.87 2.00
33.66
26.55 26.2824.04
19.34 25.49
Ex-Refinery Price
Excise Tax
Municipal Tax
VAT
Oil Fund
Conservation Fund
Marketing Margin
ULG Gasohol 95E10
Gasohol 95E20
Gasohol 95E85
Gasohol 91 H-Diesel
9%
47%
44%
7%
33%
60%
7%
33%
60%
10%
19%
71%
20%
115%
(35%)
8%
33%
60%