Bangchak Announces 2020 Operating Results Ready to Forge Ahead Post-Restructuring, with Strong Liquidity. Power Plant and Bio-based Businesses are Shining Stars.

Bangchak Group announced 2020 operating results; a revenue of 136,450 million baht and a total EBITDA of 4,104 million baht. Net loss of parent company 6,967 million baht, due to the impact of the COVID-19 crisis on the refining and marketing businesses in particular. Despite this, service stations have been ranked No. 1 on the consumers’ minds for two years in a row, and the Inthanin Coffee Shop has won three national awards. Power plant and bio-based businesses recorded the highest growth. Moving forward, the Group is focused on leveraging innovation to increase its strength and enhance income.

Mr. Chaiwat Kovavisarach, President and Chief Executive Officer of the Bangchak Corporation Public Company Limited (Bangchak), shared his firm’s operating results in 2020: Bangchak Corporation Plc. and its subsidiaries recorded revenue from selling of goods and rendering service of THB 136,450 million (-28% YoY), with EBITDA of THB 4,104 million (-53% YoY), and recorded an Operating EBITDA of THB 8,874 million (-10% YoY). In 2020, the company group faced many challenges arising from the global COVID-19 pandemic, with its unprecedented global implications. The world economy went into a recession after lockdown measures were announced in many countries, leading to a significant decline in demand for fuel consumption across the world. Moreover, pressures from the Saudi Arabia - Russia oil price war added to a significant decline in the price of crude oil and finished product. As a result, the performance of petroleum-related businesses across the globe has been adversely affected. However, for the Bangchak Group, the continuous growth of Power Plant and Bio-Based Products Businesses’ performance mitigated the volatility in performance.

The volatility of oil prices and the slowdown in global economic activity had a significant impact on the Thai economy, especially on businesses related to the tourism industry, which was the most affected during Q2/2020. During the second half of the year, the economy started to show signs of recovery, with demand for domestic fuel consumption making a continuous recovery due in part to the various government measures to stimulate the economy. The company group worked to mitigate the effects of COVID-19 by focusing on making work processes more efficient, agile, and easily adaptable to many scenarios. Changes were made to the business continuity plan and the organization to create new channels to reach the market and the customers, as well as continuing to improve production capacity and search for new sources of revenue. By focusing on cost control in 2020, the company was able to lower expenses by THB 900 million from its initial budget. The decrease of crude oil prices in 2020 (-30% YoY) resulted in the company group’s Inventory Loss of THB 4,743 million. Also, asset impairment was recorded as a loss of THB 2,375 million. Additionally, the impairment loss per TFRS 9 of THB 891 million was recorded and resulted in 2020 recording a net loss attributable to owners of the parent of THB 6,967 million (-502% YoY) or a loss per share of THB 5.50. However, the company group made efforts to adjust the investment structure along with maximizing company benefits in preparation for events that will transpire in 2021. As a result, cash flow at the end of 2020 was THB 21,651 million.

The operating results of each business group are as follows:

1. Refinery and Oil Trading Business

• Performance was severely affected by the volatility of oil prices, and Gross Refinery Margin was at low levels due largely to a significant decline in demand for fuel consumption across the globe. During this year Operating GRM was 3.20 $/BBL, which is a 2.21 $/BBL decline from last year. The refinery lowered its production in response to the lowered demand, with an average production rate of 97.2 KBD, an 81% utilization rate. Furthermore, a THB 4,379 million Inventory Loss was recorded, as crude oil prices declined sharply this year.
• BCPT Pte. Ltd., is still expanding, recording a 20% YoY increase in crude oil and finished product transactions. Gross profit increased from the previous year, due to more value added to the Low Sulphur Fuel Oil product from being further treated under the IMO measures.

2. Marketing Business

• Total sales volume declined by 17% YoY, due to the COVID-19 outbreak. Both the first wave and the new emerging phase has caused the domestic demand for consumption of fuel to decline. The tourism and airline industries were affected particularly severely.
• The company still maintains its service station expansion strategy. The total number of service stations as of the end of 2020 was 1,233 stations, with cumulative market shares of throughput per service station in 2020 at 15.6% (data from Department of Energy Business). The company was able to maintain its popularity as the number 1 among customers for the second year in a row from the Net Promoter Score (NPS).
• The company sells the B10 Diesel fuel - which has been designated as the standard Diesel fuel within its service stations across the country - has debuted the new Gasohol S EVO FAMILY of products, and has upgraded the E20 S EVO to premium quality. Moreover, the company implemented a Digital Payment System. With this launch, the company has become the first in Thailand to provide a full-service payment system.
• The Inthanin Coffee Shop had a total of 673 branches at the end of 2020. It is the only coffee brand to receive the Best Coffee GET Awards 2019 and the Best Operation Grab Food Awards 2020 from 2 Food Delivery services. It was also awarded the Thai Star Packaging Award 2020 in the category of environmentally friendly packaging.

3. Power Plant Business

• The growth in performance resulted mainly from investment expansion in the Nam San 3A and Nam San 3B Hydro Power Plant project (total PPA of the 2 projects is 144 MW) in Lao PDR, and from the acquisition of the Solar Power Plant project in Thailand, “RPV” comprising of 4 projects (PPA 20 MW) – leading to an increase in total electricity sales by 100% YoY. At present, the total PPA is 473.7 MW and realized shares of profit from associate companies is THB 270 million, a decline from the previous year, mainly due to a THB 172 million refinancing expense for the Geothermal Power Plant business in Indonesia.
• The refinancing has led BCPG Plc. (“BCPG”) to receive share payment from the capital reduction in its associate company, Star Energy Group Holding Pte. Ltd., in the amount of THB 842 million (proportionate to shares held by BCPG at 33.33%). Furthermore, at BCPG’s extraordinary general shareholder meeting, approvals were given to the plans to increase registered capital through the offering of 1.3 billion ordinary shares. The company expects to receive an additional THB 1.02 billion in capital to expand the investment following its 5-year strategic plan. Parts of the capital will be used for loan repayment, strengthening the company’s financial structure.

4. Bio-Based Products Business

• Performance has grown continuously and has reached an all-time high level. The Biodiesel Business recorded an increase in gross profit by 201% QoQ and 177% YoY, due to its ability to better manage raw material cost, and revenue from sales increase due to the average price of B100 rising significantly. This is the result of the various measures issued by the government sector to promote the consumption of crude palm oil. The Ethanol Business saw the selling price of Ethanol increasing in relation to its raw material cost. Despite a decrease in demand for Ethanol consumption in the energy sector, sales of industrial-grade ethanol (used to produce alcohol gel and disinfectant products) increased sharply, leading to an overall increase in gross profit of 26% YoY.
• BBGI Plc. expanded its business to high-value bio-based product businesses via its investment in Manus Bio Inc., which is world-famous as a leading manufacturer of high-value bio-based products. It has deployed advanced bio-fermentation by investing in the Series B Preferred Stock, valued at THB 800 million. The two companies established a joint venture company called “WIN Ingredients” to conduct this business within the Southeast Asia region, and have further plans to construct a Synthetic Biology plant to manufacture Multi-Products product types - the first in Southeast Asia to respond to these demands of the modern healthcare consumer.

5. Natural Resources Business

• Performance declined significantly, due to the realization of loss from invested capital in its associate company, OKEA. Last year the company realized profit from OKEA. The price of crude oil and natural gas adjusted downward sharply in 2020, due to the effects of the COVID-19 outbreak. This resulted in OKEA recording a decline in revenue. Also, incremental records in impairments were Technical Goodwill, Ordinary Goodwill of the Draugen, and Gjøa fields. Additionally, an impairment related to the Yme asset under development was recorded due to a delay in its production plan and an increase in capital expenditure. However, there were realized gains from foreign exchange due to the appreciation of the Norwegian Krone (NOK) against the US Dollar. Finance costs declined compared to the previous year, partially due to interest expenses having been capitalized as part of the project cost, and realized deferred income tax which assisted lower net loss for this year.
• As such, OKEA invested in the Calypso and Aurora petroleum fields which are situated near the Draugen and Gjøa fields, respectively. This will help lower the cost of development and production from joint synergy. OKEA also invested in the Vette fields and was awarded 6 new production licenses, which served to help strengthen the OKEA investment portfolio.
• At the end of 2020, BCP Innovation Pte. Ltd. (“BCPI”) reduced its shareholding in Lithium Americas Corp. (“LAC”). The total value from divestment was approximately USD 136 million, which has been reserved for future business expansion opportunities.

The Company launched the "Winnonie" startup (Debt-Free Motorcycle-Taxi Stand), with the express goal of actively reducing debt incurred by taxi motorcyclists. The company pioneered the leasing of Innovative Green electric motorcycles with taxi motorcyclists in areas surrounding the Bangchak headquarters and refinery. Participating taxi motorcyclists can swap batteries at battery-swapping machines inside Bangchak service stations.

In 2021 it is expected that the COVID-19 epidemic will resolve after the planned distribution of the vaccine within Thailand. Bangchak's business operations are ready to adapt, expand management potential, and invest in new business as the leading green innovation company for a sustainable future. With a firm focus on energy transition, Bangchak aims to increase revenue from green business to 40-50% in 2024