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Project MAX

Analyst Meeting

15 November 2016

2

MAX Agenda

What is Project MAX?

What does Project MAX do ?

How could Project MAX improve

PTTGC’s performance?

What we have done so far …

3

PTTGC strategic direction

From the aspiration to be the first quartile-performance company

4

What is project MAX ?

New normal

To adjust ourselves to the new normal, Project MAX is aimed to improve

Performance and Organizational Health in sustainable way

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9

16

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Why performance & organizational health ?

3x

TRS over time (%) Org Health

Top quartile

Middle quartiles

Bottom quartile

Average Total Return to Shareholders (TRS) by health quartile (9 year average)

Companies with top quartile health deliver on average 3x

greater TRS over time

Source: McKinsey

Aspiration path of PTTGC “transformation”

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What does Project MAX do ?

Organizational health Performance

Productivity oriented

Work process improvement

Collaborated and cross-functional

Partnership with external stakeholders

Classroom / OJT training

McKinsey Academy

Experiential learning

Shift employee mindset

Drive 4 core behaviors

Build new capabilities

Increase capacity for renewal

Values/ Culture

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How could Project MAX improve PTTGC’s performance?

Process

people

mindset

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Whole picture of Project MAX

Performance Top down diagnostic 6 weeks

Overall assessment “Assess full potential”

Phase 1

Deep-dive analysis and implementation Deliver full potential

Phase 2

Bottom up

planning

12 weeks

Transformation

implementation

24-30 months

Phase 3

Health

Performance management

▪ Track the progress of transformation and maintain the momentum to ensure rigorous execution

Capability building

▪ Deliver training programs on key functional topics

▪ Bring new tools & techniques ▪ Embed new mindset and desired behaviors

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Phase 1: Assess full potential thoroughly

Performance Top down diagnostic 6 weeks

Overall assessment “Assess full potential”

Phase 1

• Use the same assessment methodology as the Private Equity’s due diligence process to estimate the baseline (As-is) and EBIT uplift potentials

• Focus on efficiency improvement via

Equipment upgrade, standard/ work process improvement

Introduce new tools/ techniques to increase the efficiency

• Project scope includes initiatives that have payback period not over 3 years

Phase 1 concept: What could we do? 2016

Mar-May

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Potential improvement from top down assessment R

ecu

rrin

g E

B I

T

Lever

Plant operations & maintenance

A

Commercial & marketing B

Sub-lever

Supply chain & Unit Optimization

1

2 Energy Efficiency

3 Maintenance

Turnaround 5

4 Availability

Procurement C

Small to medium CAPEX D

Cash

sa

vin

g H

Spare part inventory G

Refinery & Shared

Facilities Aromatics Olefins

Polymers EO-Based

Performance

Green Chemicals

Phenol

3 GPCs + 4 BUs

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Phase 2: Deep-dive analysis and implementation

Performance Top down diagnostic 6 weeks

Overall assessment “Assess full potential”

Deep-dive analysis and implementation Deliver full potential

Phase 1 Phase 2 Phase 3

Bottom up

planning

12 weeks

• BU representatives, consultants and industry experts jointly develop the Bankable plan of the initiatives, including

Deep dive analysis

Quantify impact

Action plan and key milestones

Financial projection for both implementation cost and benefit

Phase 2 concept: Step-by-step planning what we’re going to do

2016

Jun-Aug

• Set up the “Transformation Office (TO)” as core team to expedite the decision making, shorten process time, clear roadblocks by week to make sure the benefits realization as plan

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Phase 3: Roll out the transformation process

Transformation

implementation

24-30 months

• Launch a full-scale effort to drive value to the bottom-line

• Follow up the progress and monitor the actual benefit realized against plan

• Develop catch up plan if the initiative could not fully realized as expected

• Continuously initiate new ideas into the pipeline

Phase 3 concept: Launching the spaceship

2016 ‒

2019

Performance Top down diagnostic 6 weeks

Overall assessment “Assess full potential”

Deep-dive analysis and implementation Deliver full potential

Phase 1 Phase 2 Phase 3

Bottom up planning 12 weeks

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Systematic idea development and performance monitoring

Health

Performance management

Phase 1 Phase 2 Phase 3

▪ Track the progress of transformation and maintain the momentum to ensure rigorous execution

▪ Track the initiative pipeline progress by using a systematic process

Overall assessment “Assess full potential”

Deep-dive analysis and implementation Deliver full potential

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Expected benefit realization curve

Cumulative recurring benefits (Mbaht)

ILLUSTRATIVE IL2 IL0 IL1 IL3 IL4 Bankable plan

Quick wins within 2016

Details

▪ All step-by-step milestones are planned and validated in Phase 2: Bottom up planning

▪ Validated initiatives (above IL3) will be counted as target of potential benefit

▪ Execution plan will be expedited to achieved target, while new initiatives (IL0) can also be added at any time

Cut-off date to set the target and bankable plan

Phase 2:

Bottom Up Planning

Phase 3:

Implementation

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Expected recurring benefits by workstream*

CAPEX

Procurement

PHN

GRN

EOB

POL

OLE

ARO

REF

Cumulative recurring benefits along the project period

We focus on holistic improvement of whole organization

We also do not

compromise on

SAFETY and RELIABILITY

Only

initiatives per workstream capture over

of total target

Reliability

ILLUSTRATIVE

Remark : * moving target (as of Sep 16) depends on progress of developing initiatives

100%

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Build up people capability to ensure the sustainability

Health

Performance management

Capability building

Phase 1 Phase 2 Phase 3

▪ Track the progress of transformation and maintain the momentum to ensure rigorous execution

▪ Deliver training programs on key functional topics ▪ Bring new tools & techniques ▪ Embed new mindset and desired behaviors

Working side-by-side and get mentoring

from global experts

Foster 4 core behaviors among staff

Take initiative to create better results

Work proactively to serve customers’ needs

Strive for the greater good

Keep improving self and inspiring teamwork

Overall assessment “Assess full potential”

Deep-dive analysis and implementation Deliver full potential

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Shift mindset with new processes & tools

Performance tracking and management tool

▪ Gather all initiatives in one database to see the big pictures

▪ Progress tracking on weekly basis

Sales performance management tool

▪ Support management’s decision making in various aspects, i.e. Sales channel shift, product mix, geography mix

Margin curve

Price waterfall

Benefit dashboard

Procurement tool

▪ Increase price competition among suppliers by introducing new procurement technics

Real time price bidding

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What we have done so far …

EBIT improvement from increased sales & throughput, adjust customer portfolio

Marketing and sales • Increase domestic market share for refinery and aromatics products by

changing customer portfolio • Engage new customers with new product applications for EO based &

polymer products

Polymer Shift product portfolio and expand the market of High Value-added

Products in domestic and export Increase throughput with minimum investment

Olefins Increase fuel air for higher power generation by using inlet fogging

technology

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What we have done so far …

EBIT improvement from cost saving by changing / improving work process

Supply chain (upstream) Improve crude & condensate approval process Improve crude purchasing methodology Improve LP model efficiency

Procurement Drive price competition by using different technics, i.e. clean sheet

analysis, e-Auction, expand Approved Vendor List (AVL) pool in potential Low Cost Countries

Sustained CAPEX Shorten the decision making and approval process for investment Scope & schedule optimization

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