Message from Chairman and CEO

In 2017, the Company’s total sales of all products totaled to 52.07 million unit cases, a decrease of 1.48% from 52.84 million unit cases in the previous year. The Company’s revenue from sales also dropped, with revenue from sales of all products at Baht 5,670.99 million, a drop of Baht 33.01 million or 0.58% from the previous year.

To Shareholders

In the year 2017, the Company encountered various factors that had made a significant impact upon the Company’s operating results, and hence, was unable to accomplish its goal of approximately 5% increase in sales from the previous year, as it earlier forecasted. Such factors that had affected the Company’s operating results included the unseasonable climate conditions in Thailand, especially in the southern part of the country where continuous and heavy rainfalls took place from the end of 2016 through to the beginning of 2017. As a result, 12 out of 14 provinces were submerged by the flood waters for a long period of time, some for weeks, and some for months. Damages were inevitable among the residents of the flooded provinces, especially rubber and oil palm cultivators, whose earnings mainly came from the two major economic crops. Since homes and retail stores were also damaged by the floods, the indirect impact on the Company was, inevitably, a loss of selling opportunities. In addition to the unfortunate flood situation in many areas of southern provinces, the prices of agricultural products, especially major economic crops such as rubber and oil palm, had dropped as a result of a fall in their world prices. Many operators in the fishing industry had also closed their businesses, due to a more stringent government control on illegal fishing or Illegal Unreported and Unregulated Fishing (IUU Fishing). The latter had presented an impact upon the purchasing power of the consumers of the South, whose earnings from fishery, both directly and indirectly, had been eradicated. Even though tourism in Southern Thailand had improved, it was not sufficient to compensate for the loss of earnings from other industries.

In 2017, the Company’s total sales of all products totaled to 52.07 million unit cases, a decrease of 1.48% from 52.84 million unit cases in the previous year. The Company’s revenue from sales also dropped, with revenue from sales of all products at Baht 5,670.99 million, a drop of Baht 33.01 million or 0.58% from the previous year. However, the Company’s Cost Management and Expense Control Measure had proven beneficial for the Company’s operating results of 2017, as it had led to the profits for the year in the amount of Baht 283.31 million, an increase of Baht 42.22 million or 17.51% due to the following reasons:

  1. Cost per unit had declined as a result of an increase in PET production, via production line number 2 at the second plant in Amphoe Poonpin, Surat Thani;
  2. Expense control, especially on sales promotion and marketing expenses;
  3. The Company had been able to save up on the sales and product distribution expenses, following the development and implementation of the Pre-sell and Tele-sale system.

The operating results of the year 2017, as appeared in the Consolidated Income Statement, showed the profits for the year of Baht 283.31 million, equivalent to Earnings per Share of Baht 1.42. The Board of Directors had passed a resolution on 9th March 2018 to approve dividend payment from the operating results of 2017 to the shareholders totaling to 199,218,000 shares at the rate of Baht 1.00 per share or 70.42% of earning per share. Dividend payout for the year, therefore, totaled to Baht 199.22 million. The Company had already paid out interim dividend to the shareholders at the rate of Baht 0.38 per share on 15th September 2017, with additional dividend remained to be paid out at the rate of Baht 0.62. The final dividend payment for the year 2017 shall be made on 18th May 2018, and the mentioned rates of dividend payout are in accordance with the Dividend Payment Policy of the Company.

On a Social and Environmental note, the Company places great emphasis on the subject of global warming. As we all know, greenhouse gases are emitted directly through human activities continuously on a daily basis, be it from the energy used in agriculture, development and expansion of the industrial sector, transportation, tourism, deforestation as well as other forms of damages and destructions to natural resources and environment. All of which are the main causes of global warming and the problem multiplies by day, which is why many countries have become fully aware of the fact and made it their priority to proceed with measures to mitigate greenhouse gas emissions. The Company places high priority on this subject and has a clear policy to apply the carbon footprint calculation method to every product of every size, which shall be completed within the year 2018. Moreover, a joint effort has been made between the Company and The Federation of Thai Industries to set up a Carbon Footprint for Organization project, at both Haad Yai and Poonpin Plants. As for the Carbon Footprint for Product project, the Company has already set it up since 2012.

The Company has received carbon footprint certification from Thailand Greenhouse Gas Management Organization (Public Organization: TGO) for a total of 24 SKUs (types and sizes) of its products. Such products include all types of the 10oz. glass bottled products; all types of the 450ml PET products; all types of the 325ml and 240ml CAN products; and the Coca-Cola product in 1.25litre PET bottles and 250ml one-way bottles. Coca-Cola products in 1.25litre PET bottles and 325ml cans have actually received global warming label (gold label). Moreover, the Company had joined the Water Footprint Project in 2018 led by Water Institution for Sustainability, The Federation of Thai Industries, with Haad Yai Plant being chosen as the pilot plant for estimation of water utilization in a factory and office. The estimation shall come from the calculation of total volume of water utilized throughout the entire process of the production chain as well as water utilized in the varied activities in the factory, which shall be used to manage the use of water in the most suitable and sustainable manner.

In terms of investments in the year 2018, an investment on a Plastic Injection Machine is in the plan. The main reason for this investment is to accommodate the production capacity that has been projected to increase, and since the existing machines at Haad Yai and Poonpin Plants are currently reaching full capacity. The new Plastic Injection Machine shall also receive tax privilege, since it has been certified by the Board of Investment (BOI)

For the economic outlook of Thailand for the year 2018, we will witness gradual recovery. Government’s speedy move on investment in infrastructure; projected improvement in the export and tourism sectors; and the various government measures issued to support agricultural sector shall be beneficial for the overall economy of the country and the South. All of these positive factors shall also indirectly help to increase consumers’ spending power. The climate condition in the first half of 2018 has also been forecasted to be less volatile than the previous year. Climate condition really does produce an impact upon the sales of products. For example, when the rain pours down, most people would opt to stay home, and hence, consumption of any products, i.e. sparkling beverages, would drop. To add on to the positive note, the recent adoption of the pre-sell system to replace the previous sales truck system of sales and distribution of products has proven beneficial for the Company. The Company has already completed the implementation of the pre-sell system in all of its 20 branches since the month of December 2017. In 2018, we have, therefore, started to witness increased advantages from lower logistics and sales expenses as well as an increase in sales following new store openings. The recent announcement by the government to float the price of sugar, which is another main ingredient of the Company’s products, second only to syrup concentrate, shall, predictably, lead to some decline in the price of sugar. Following the decline in the price of sugar, a decrease in the Company’s cost of production will result. As such, the Company anticipates some brighter results in 2018 than the ones of year 2017, and hence, has raised its sales target by 3-4% and revenue from sales by 4-5% for the year 2018. In any case, the Company shall remain the market leader of the southern sparkling beverage industry with the market share of approximately 84%. (Source: AC Nielsen)

Lastly, the Board of Directors would like to thank all of the shareholders, business partners, customers, consumers and stakeholders for their continued support for the Company. The Company would also like to thank the management team and all of the staffs/ employees for their whole-hearted effort and hard work, to get the Company through all obstacles, big or small. Even though there might remain some obstacles along the way, we are certain and ready to wade our way through and overcome the obstacles together, for the reason of stability and prosperity of the Company and all of the staffs/employees, in a sustainable manner.

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Gen Charan Kullavanijaya

Chairman
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Sec. Lt. Phairoch Rattakul

Chief Executive Officer