- Ichitan Group

Transcription

- Ichitan Group

ICHITAN GROUP Public Company Limited
Contents
Message from Chairman Financial Highlights
General Information
Board of Directors
Executive Committee
Profiles of Directors and Executive Committee Members
Profiles of Company Secretary and Internal Audit Head
2014 Highlights
Social and Environmental Responsibility
Business Policy and Overview
Nature of Business
Risk Factors
Operating Assets
Legal disputes
Information of Securities and Shareholders
Management Structure
Corporate Governance
Corporate Social Responsibility
Internal Control and Risk Management
Related-Party Tracsaction
Management Discussion and Analysis
Report of the Audit Committee
Report of the Nomination and Remuneration Committee
Report of the Board of Directors’ Responsibility for the Financial Reporting
Financial Statement
02
04
06
08
10
11
21
22
24
26
31
42
45
62
63
66
82
93
109
112
127
135
136
137
138
Message from Chairman
Dear shareholders,
It is probably not right to say that Ichitan’s growth
in the year 2014 is an unprecedented growth.
In 2014, we earned Baht 6,179 million in revenue at
the production capacity of 1 billion bottles of drinks
which will be increased to 1.2 billion bottles in 2015.
Completing the construction of our factory which
is recognized as one of the factories with the most
advanced technology in Thailand.
Stepping up as No.1 leader in the ready-to-drink tea
market. Listing on the Stock Exchange of Thailand.
Adding Bireley’s drink to our production line of
green tea and herbal tea drinks.
Partnering with our regional and global alliances
to build “Ichitan Indonesia”
…All of these were materialized within just 1 year.
So… It is not right to say that Ichitan’s growth
2014 was unprecedented. Because Ichitan has
witnessed big leaps of growth every year,And
this is the fourth successive years of impressive
success.
ANNUAL REPORT 2014
Because Ichitan has witnessed big leaps of growth every year,
And this is the fourth successive years of impressive success.
Challenging and seemingly impossible goals were achieved and new records
were set again and again. Thanks to the devotion and commitment of
all employees of Ichitan. With less than 400 staff members, our united
effort has proven to be more than enough to conjure a miracle.
Next year will see more challenges...from the new market frontier.
Our opportunities will extend from over 60 million people in Thailand,
To 600 million people from all AEC countires.
I really do hope that the devotion and effort of our management team and
the employees, Together with the confidence of all our shareholders
in Ichitan, Will be the wind beneath our business wings and make
miracles happen for Ichitan again.
On behalf of the Board of Directors, I would like to thank all our shareholders,
customers, executives, employees, partners, financial institutions, the press,
and related public and private agencies for their continued support for the Company.
Please be assured that we will solidly grow our business and take our company
to another level of sustainable success and growth in the beverage market.
We hold firmly to the principles of corporate governance, transparency, and
responsibilities towards the society and the environment and concurrently
create the best value for our shareholders.
Tan Passakornnatee
Chairman and CEO
Financial Highlights
Unit
2012
2013
2014
STATEMENTS OF COMPREHENSIVE INCOME
(Million Baht)
4,483
6,532
6,209
(Million Baht)
3,653
5,648
5,189
(Million Baht)
830
884
1,020
(Million Baht)
306
884
1,079
Total Assets
Total Liabilities
Shareholders’ Equity
STATEMENTS OF CASH FLOWS
(Million Baht)
(Million Baht)
(Million Baht)
5,205
4,224
1,074
6,541
4,573
1,968
9,008
2,813
6,195
Cash Flows From Operating Activities
(Million Baht)
220
951
1,473
Cash Flows From Investing Activities
(Million Baht)
-1,536
-1,492
-2,475
Cash Flows From Financing Activities
(Million Baht)
1,213
589
1,070
Increase in Cash and Cash Equivalents - Net
(Million Baht)
-103
48
68
1.0
0.88
0.89
Total Revenues
Total Expenses
Profit Before Income Tax Expenses
Profit for the Years
STATEMENTS OF FINANCIAL POSITION
FINANCIAL RATIO
Earnings per Share : EPS
4
Operating Profit Margin
(%)
9.6
15.4
18.0
Gross Profit Margin
(%)
26.6
31.8
34.2
Net Profit Margin
(%)
7.7
13.5
17.4
Current Ratio
(X)
0.7
1.2
1.9
Return on Equity : ROE
(%)
50.7
66.7
26.4
Return on Assets : ROA
(%)
8.2
15
14
Debt to Equity ratio : D/E
(X)
3.9
2.3
0.5
Account Receivable Turnover : A/R Turnover
(Times)
11.4
10.2
7.2
Average Collection Period
(Days)
31.7
35.2
50.1
Inventory Turnover
(Times)
15.80
17.0
13.0
Average Inventory Period
(Days)
22.8
21.20
27.0
Accounts Payable Turnover
(Times)
9.9
12.5
10.1
Average Payment Period
(Days)
36.3
28.9
35.8
Cash Cycle
(Days)
18.20
27.6
41.3
ANNUAL REPORT 2014
Net Profit (Million Baht)
1,000
5,000
800
600
3,000
1,000
200
-
2014
2012
2014
Net Profit Margin
34%
25%
20%
27%
15%
10%
5%
2013
2014
2012
2013
2014
Return on Equity (ROE)
26%
80%
70%
60%
50%
40%
30%
20%
10%
-
67%
2012
51%
40%
35%
30%
25%
20%
15%
10%
5%
-
32%
Gross Profit Margin
2013
17%
2013
14%
2012
306
400
2,000
8%
4,000
3,907
6,000
1,079
1,200
884
7,000
6,179
6,484
Sale Revenue (Million Baht)
2012
2013
2014
5
General Information
Company Name
Symbol
Registration Number
Industry
Sector
Type of Business
Head Office
Ichitan Factory
:
:
:
:
:
:
Ichitan Group Public Company Limited (“ICHI”)
ICHI
0107556000485
Agro & Food Industry
Food & Beverage
The Company manufactures and sells ready-to-drink green tea,
functional drink, ready-to-drink black tea, herbal drink, and lowsugar tea under the brands of Ichitan Green Tea, Ichitan Double Drink,
Ichitan Dragon Black Tea, Yen Yen by Ichitan, and Ichitan Selected,
respectively.
: 2922/301, Charn Issara II Building., 28th Floor,
New Pethchburi Road, Bangkapi, Huaykwang, Bangkok, 10310
Telephone 0-2716-5555, Fax 0-2716-7000
: Ichitan Green Factory, Rojana Industrial Park Zone 3, 111/1 Moo 4
Uthai, Ayutthaya, 13210
Registered Capital
Paid-up Capital
Company Secretary
:
:
:
Investor Relations
:
Telephone 035-2761111, Fax 035-276123
Baht 1,300,000,000 (one billion and three hundred million baht)
Baht 1,300,000,000 (one billion and three hundred million baht)
Telephone 02-716-5555 Ext. 701
E-mail : [email protected]
Telephone 02-716-5555 Ext. 912
E-mail : [email protected]
General Information of Co-Venturer
Company Name
Registration No.
Type of Business
Office
6
: PT Ichitan Indonesia Company Limited
: 4014112536103886
: Manufacturing and distributing ready-to-drink beverage branded
Ichitan
: Jl. MH. Thamrin No.9, Kel. Cikokol, Kec. Tangerang, Tangerang 15117,
Banten
Telephone
Registered Capital
: 021-55755951
: IDR 400,000 million (approximately Baht 1,184.0 million)
Paid-up Capital
: IDR 100,000 million
ANNUAL REPORT 2014
References
Registrar
Certified Public Accountant
: Thailand Securities Depository Company Limited (TSD)
62, The Stock Exchange of Thailand Building, 4th, 6th and 7th
Floors, Ratchadapisek Road, Klongtoey, Bangkok 10110,
Telephone 02-229-2800
: KPMG Phoomchai Audit Limited
1, Empire Tower, 50th-51th Floors, South Sathorn Road,
Yannawa, Sathorn, Bangkok, 10120, Telephone 02-677-2000
7
Board of Directors
1. Mr. Tan Passakornnatee Chairman of the Board
2
8
3
5
4
6
8
7
9
10
ANNUAL REPORT 2014
2. Mrs. Eng Passakornnatee
3. Mr. Chiu Yueh-Chin
4. Mr. VirojSupasoon
5. Mr. Tanapan Khongnuntha
6. Ms. Araya Panichayanon
7. AVM.Nathawat Nimmolthanakorn
8. Mr. Prasan Limpipatanakul
9. Mr. Issarachai Decharit
10. Mr. Apichat Sukachirawat
Director
Director
Director
Director
Director
Independent Director
Company Secretary
9
Executive Committee
1. Mr. Tan Passakornnatee 3
5
1
2
4
2.
3.
4.
5.
10
Chairman of the Board
Mrs. Eng Passakornnatee
Director
Mr. Preecha Augcharanonda Director
Mr. Viroj Supasoon
Director
Mr. Tanapan Khongnuntha Director
Profiles of Directors and
Executive Committee
Members
ANNUAL REPORT 2014
01
Name-Surname
Position
Mr. Tan Passakornnatee
Chairman of the Board / Chairman of the Executive Committee and CEO
Age (years) 55
Nationality Thai
Education
• Honorary Doctorate, Ramkhamhaeng University
• Honorary Doctorate, Business Administration,
Suratthani Rajabhat University
• Honorary Doctorate, Lampang University
Training
• DAP 12/2004, Thai Institute of Directors
Association
Shareholding (%) 13.85
(as of 28 August 2014)
Family Relationship with Executive
• Spouse of Mrs. Eng Passakornnatee
Work Experience
:
Positions in companies listed on the Stock Exchange
of Thailand
Present
• Chairman of the Board / Chairman of the
Executive Committee and CEO Ichitan Group Pcl.
1999 - 2010
• Director and Managing Director Oishi Group Pcl.
Positions in companies not listed on
the Stock Exchange of Thailand
Present
•
•
•
•
•
•
•
•
•
•
•
•
Director Eng and Eng Sriracha Asset Co., Ltd.
Director Tan and Tan Sriracha Asset Co., Ltd.
Director Eng Tan Asset Co., Ltd.
Director Tanboon Co., Ltd.
Director Japanese Prime Restaurants
Management Co., Ltd.
Director DST Asset Co., Ltd.
Director Tan and Tan Asset Co., Ltd.
Director Diew Diew Kub Tan Co., Ltd.
Director Gluay Gluay Co., Ltd.
Director Passakornnatee Co., Ltd.
Director Ichipung Co., Ltd.
Director Tan Eng Asset Co., Ltd.
11
Work Experience
:
Positions in companies listed on the Stock Exchange
of Thailand
02
Present
• Director, Member of the Executive Committee and
Senior Executive Vice President Ichitan Group Pcl.
1999 - 2010
• Director and Deputy Managing Director
Oishi Group Pcl.
Positions in companies not listed on the Stock
Exchange of Thailand
Present
•
•
•
•
•
Name-Surname Mrs. Eng Passakornnatee
Position
Director / Member of the Executive Committee / Member of the Risk Management Committee / Member of the Nomination and Remuneration Committee and
Senior Executive Vice President
Age (years)44
Nationality Thai
Education
• Bachelor of Business Administration (Finance),
Bangkok University
• Master of Business Administration,
Ramkamhaeng University
Training
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
• DAP 12/2004, Thai Institute of Directors Association
•
• DCP 44/2004, Thai Institute of Directors Association
•
Shareholding (%) 9.23 (as of 28 August 2014)
12
• Spouse of Mr. Tan Passakornnatee
Director Eng and Eng Sriracha Asset Co., Ltd.
Director Tan and Tan Sriracha Asset Co., Ltd.
Director Eng Tan Asset Co., Ltd.
Director Tanboon Co., Ltd.
Director Japanese Prime Restaurants
Director DST Asset Co., Ltd.
Director Tan and Tan Asset Co., Ltd.
Director Diew Diew Kub Tan Co., Ltd.
Director Gluay Gluay Co., Ltd.
Director Passakornnatee Co., Ltd.
Director Ichipung Co., Ltd.
Director Wedding Business Consultant Co., Ltd.
Director Thank You Service Co., Ltd.
Director T.Y Marriage Studio Co., Ltd.
Director Tokiya Co., Ltd.
Director My Memory Studio Co., Ltd.
Director Your Studio Co., Ltd.
Director Modern Wedding Studio Co., Ltd.
Director Victoria Wedding Professional Co., Ltd.
Director The Classic Studio Co., Ltd.
Director White Mary Studio Co., Ltd.
Director Beloved Studio Co., Ltd.
Director Mary Me Wedding Studio Co., Ltd.
Director Mu Tierra Wedding Gown and
Planner Co., Ltd.
Director Kin Kub Tan Co., Ltd.
Director Tan Eng Asset Co., Ltd.
ANNUAL REPORT 2014
03
Name-Surname Mr. Chiu Yueh-Chin
Position
Director and Factory Consultant
Age (years) 53
Nationality Taiwanese
Education
• Bachelor of Mass Communication (Journalism and Print
Media), Shih Hsin University
Training
• None
• None
Work Experience
:
Positions in companies listed on the Stock Exchange of
Thailand
2011 - Present
• Director and Factory Consultant Ichitan Group Pcl.
1999 - 1994
• Director and Member of the Executive Committee
Oishi Group Pcl.
Positions in companies not listed on the Stock Exchange of
Thailand
Present
• Director Wedding Business Consultant Co., Ltd.
• Director Thank-You Service Co., Ltd.
1993 - 1994
• Manager, Franchise Sale Sew Wi Zu Sue Lian Tsaw Co., Ltd.
13
04
Name-Surname Mr. Viroj Supasoon
Position
Director / Member of the Executive Committee / Member of the Risk Management Committee and Executive Vice President, Factory Department
Age (years) 49
Nationality Thai
Education
• Bachelor of Science, Microbiology, Kasetsart University
Training
• None
Work Experience
:
Positions in companies listed on the Stock Exchange of Thailand
Present
• Director, Member of the Executive Committee and Executive
Vice President, Factory Department Ichitan Group Pcl.
2011
• Executive Vice President, Factory Department
Ichitan Group Pcl.
Thailand
2004 - 2011
• General Manager Oishi Trading Pcl.
1998 - 2004
• Factory Manager Foremost Friesland (Thailand) Co., Ltd.
1997 - 1998
• Project Manager Dairy Plus Co., Ltd.
1989 - 1997
• Production Manager Foremost Friesland (Thailand) Co., Ltd.
1987 - 1989
• Production Team Head Dutch Mill Co., Ltd.
14
05
ANNUAL REPORT 2014
Name-Surname Mr. Tanapan Khongnuntha
Position
Director/Member of the Executive Committee/Member of the Risk Management Committee and Executive Vice President, Beverage Business
Age (years)40
Nationality Thai
Education
• Bachelor of Science in Agribusiness Management, King
Mongkut’s Institute of Technology Ladkrabang
• Master of Business Administration, Ramkhamhaeng
University
Training
• None
Work Experience
:
Positions in companies listed on the Stock Exchange of
Thailand
Present
• Director/ Member of the Executive Committee
and Executive Vice President, Beverage Business
Ichitan Group Pcl.
2004 - 2006
2011
• Commercial Marketing Manager Oishi Group
Pcl.
• Executive Vice President, Beverage Business
Ichitan Group Pcl.
Positions in companies not listed on the Stock
2010
• Department Director (Marketing), Beverage Business
Oishi Group Pcl.
2008 - 2010
2006 - 2007
• General Manager, Marketing Department
Klang Plaza Jomsurang Co., Ltd.
• Assistant Director (Marketing), Beverage Business
Oishi Group Pcl.
2007 - 2008
• Marketing Manager, Beverage Business Oishi Group Pcl.
15
06
Name-Surname Ms. Araya Panichayanon
Position
Director and Deputy Financial Director
Age (years) 39
Nationality Thai
Education
• Bachelor of Business Administration (Finance), Thai
Chamber of Commerce University
Training
• None
Work Experience
:
Present
• Director and Deputy Financial Director Ichitan Group Pcl.
2011
• Deputy Financial Director Ichitan Group Pcl.
Thailand
Present
• Director Lopburi Inn Plaza Co., Ltd.
• Director Diew Diew Kub Tan Co., Ltd.
2011 - 2013
• Director I Am Green Tea Co., Ltd.
(formerly Ichitan Trading Co., Ltd.)
1999 - 2011
• Manager, Finance Department Wedding Business
Consultant Co., Ltd.
16
07
ANNUAL REPORT 2014
Name-Surname AVM. Nathawat Nimmolthanakorn
Position
Independent Director / Chairman of the Audit Committee and Member of the Risk Management Committee
Age (years) 64
Nationality Thai
Education
• Bachelor of Education (Secondary Education),
Srinakharinwirot University
Training
• AACP 16/2014, Thai Institute of Directors Association
Shareholding (%) None
• None
Work Experience
:
Present
• Independent Director, Chairman of the Audit Committee and
Member of the Risk Management Committee Ichitan Group Pcl.
Thailand
2007 - 2012
• Manager Royal Thai Air Force Headquarters Savings
Cooperatives Limited
2005 - 2006
• Deputy Chief, Staff Officer to Commander-In-Chief, Royal Thai
Air Force Royal Thai Air Force
2002 - 2005
• Deputy Director-General Directorate of Welfare
2000 - 2002
• Chief of Staff Directorate of Welfare
1994 - 1997
• Director, Welfare Store Division Directorate of Welfare
17
08
Name-Surname Mr. Prasan Limpipatanakul
Position
Independent Director/ Member of the Audit Committee and Member of the Nomination and Remuneration Committee
Age (years) 58
Nationality Thai
Education
• Bachelor of Accounting, Chulalongkorn University
• Master of Business Administration, Kasetsart University
Training
• AACP 16/2014, Thai Institute of Directors Association
• None
Work Experience
:
Present
• Independent Director/ Member of the Audit Committee and
Member of the Nomination and Remuneration Committe
Ichitan Group Pcl.
2009 - 2014
• Deputy Managing Director Siam Commercial Samaggi
Insurance Pcl.
2009 - 2014
• Member of the Executive Committee and Consultant
Wongpaitoon Group Pcl.
Thailand
2007 - 2009
• Executive Consultant Siam Ball Sport Factory Co., Ltd.
2002 - 2006
• Member of the Executive Committee and Consultant Siam
Unisole Co., Ltd.
1999 - 2000
• Managing Director K. M. Foam Co., Ltd.
18
09
ANNUAL REPORT 2014
Name-Surname Mr. Issarachai Decharit
Position
Independent Director / Member of the Audit
Committee and Chairman of Nomination and
Remuneration Committee
Age (years) 55
Nationality Thai
Education
• Bachelor of Laws, Chulalongkorn University
• Thai barrister at law, Thai Bar Association
Training
• AACP 17/2014 Thai Institute of Directors Association
:
• None
Work Experience
:
Present
• Independent Director, Member of the Audit Committee ,
Chairman of Nomination Remuneration Committee
Ichitan Group Pcl.
2003 - Present
• Director ACAP Advisory Pcl.
1984 - 2003
• Senior Executive Vice President Thai Petrochemical Industry Pcl.
Positions in companies not listed on the Stock Exchange of Thailand
2014 - Present
• Director Global Service Center Co., Ltd.
2003 - Present
• Director ACAP Consulting Co., Ltd.
• Director ACAP Corporate Services Co., Ltd.
• Director Capital OK Co., Ltd.
• Director Professional Collection Co., Ltd.
2003 - 2014
• Director ACAP Asset Management Co., Ltd.
19
10
Name-Surname Mr. Preecha Augcharanonda
Position
Member of the Executive Committee and Executive Vice President, Accounting & Finance
Age (years) 52
Nationality Thai
Education
• Bachelor of Accounting, Thammasat University
• Master of Accounting, Thammasat University
Training
• None
Work Experience
:
Present
• Member of the Executive Committee and Executive Vice
President, Accounting and Finance Ichitan Group Pcl.
2013 - 2014
• Director Ichitan Group Pcl.
2011
• Executive Vice President, Accounting and Finance
Ichitan Group Pcl.
2002 - 2011
• Department Director, Accounting and Finance
Oishi Group Pcl.
• None
20
ANNUAL REPORT 2014
Profiles of Company Secretary
and Internal Audit Head
Name-Surname Mr. Apichat Sukachirawat
Position
Company Secretary /
Work Experience
:
Secretary to the Executive Committee
/ Secretary to the Risk Management
Committee and Secretary to theNomination
and Remuneration Committee
Positions in companies listed on the Stock
Age (years) 49
Nationality Thai
Education
• Vice President, Accounting & Finance
Ichitan Group Pcl.
2011 - Present
2002 - 2011
Training
• Deputy Director, Accounting
Department Oishi Group Pcl.
Positions in companies not listed on
Shareholding (%)
1995 - 1998
• Bachelor of Accounting,
Ramkhamhaeng University
1998 - 2002
• DAP 106/2013, Thai Institute of
Directors Association
• Accounting Manager Wedding
Business Consultant Co., Ltd.
• Company Secretary Program, Class 30
• Accounting Manager BKK (1985) Pcl.
0.45 (as of 28 August 2014)
• None
1994 - 1995
• Accountant Thai-Denmark Swine
Breeder Pcl.
Name-Surname Mr. Sumol Hobumphen
Position
Internal Audit Manager
Age (years) 37
Nationality Thai
Education
• Master of Science in Corporate Governance,
Chulalongkorn University
• Bachelor of Accounting, Rajamangala
University of Technology, Phanakhon
• Manager, Internal Audit
Ichitan Group Pcl.
Training
• Certified public accountant, Federation of
Accounting Professions Under the Royal
Patronage of His Majesty the King
• Endorsed Internal Auditing Program
(EIAP), Class 9, Chulalongkorn University
• Internal Auditing Program, Federation of
Accounting Professions Under the Royal
Patronage of His Majesty the King
• None
Work Experience
:
Positions in companies listed on
2013 - Present
2006 - 2009
• Assistant Manager, Internal Audit
Thanulux Pcl.
Positions in companies listed on
2011 - 2013
• Manager, Internal Audit
Perfect Engineering Service Pcl.
1999 - 2006
• Assistant Manager,
Internal Audit Division
Dr. Virach & Associates Office
21
2014 Highlights
21 April 2014
Ichitan Group Public Company Limited first listed and traded on
the Stock Exchange of Thailand in the food and beverage sector of the agro and food industry under the stock ticker symbol of “ICHI”.
14 April 2014
• The Board of Directors approved the Company’s deal worth Baht 240
million to acquire Bireley’s trademark and beverage formula from
Sunny Herb International Beverage Company Limited (Sunny) in 16
countries, i.e. Thailand, Cambodia, South Korea, Canada, Myanmar,
the Philippines, Malaysia, Singapore, USA, China, India, Hong Kong,
Bangladesh, Indonesia, Taiwan and Vietnam.
• Approval was granted for the acquisition of land (76-1-60 rai) in
Rojana Industrial Park in Ayutthaya worth Baht 244.9 million from
Rojana Industrial Park Public Company Limited.
• Investments in building construction and installation of systems,
machine and equipment totaling Baht 1,295.1 million.
• The 3 investment transactions mentioned above totaled Baht 1,780
million.
22
ANNUAL REPORT 2014
26 August 2014
• The Board of Directors approved the Company’s joint venture (JV)
in Indonesia with PT Atri Pasifik (“AP”), an Indonesian company,
at 50:50 with the initial investment of IDR 200,000 million (around
Baht 592 million) each, representing the JV’s total registered
capital of IDR 400,000 million (around Baht 1,184 million).
• Approval was granted for the loan commitment for the JV
worth IDR 141,250 million (around Baht 418.1 million), out of
the total loan commitment of IDR 282,500 million (around Baht
836.2 million) to be granted to the JV by the shareholders in
proportion to their equity in the JV. Loan drawdown is subject
to the fulfilment of sales target conditions under the agreement
and the JV’s construction of production plant in Indonesia.
• Approval was granted for the investments in installation of
systems, machine and equipment totaling Baht 750 million for
the Phase 2 Capacity Increase Project of the production factory
in Rojana Industrial Park in Ayutthaya.
27 August 2014
The Company signed a joint venture establishment agreement
to establish a joint venture (JV) which will manufacture and sell
ready-to-drink tea branched “Ichitan” in Indonesia. The Company
has authorized the JV to use the Company’s trademarks and
beverage formula. The joint venture agreement was made with
AP to mutually agree on the JV structure, business operation,
business management and administration, rights and duties
of each shareholders, management of return on investment in
the JV and applicable legal procedures.
29 December 2014
Mr. Chanitr Charnchainarong, Executive Vice President, Stock
Exchange of Thailand (SET) congratulated executives of Ichitan
Group Public Company Limited (ICHI), a ready-to-drink green
tea beverage manufacturer and distributor, on the Company’s
success as a constituent of the SET-100 index which will be
effective from 1 January 2015.
23
Social and Environmental
Responsibility
Recognizing the significance of the betterment of society, community and environment, the Company
is committed to address social and environmental needs and make meaningful contributions to needy
communities to give back to the society.
Following Thailand’s worst flooding in 2011, Mr.Tan Passakornnatee, the Chairman of the Board, was
inspired to instill an awareness and respect for the natural environment among the public. Guided by
the Greenovation concept, “Tan Land”, an education center worth more than Baht 50 million, has been
established over 2,000 square meters of ICHI’s factory compound in Ayutthaya. Tan Land exists to tell the
story of Ichitan, its glory and crisis, through hologram, 3D and interactive media to raise awareness for
balancing business interests with environmental protection and disseminate knowledge beneficial for
creating a world where the business, the society and the environment can prosper in harmony.
In 2013, the Company donated a total of Baht 6 million in cash to hospitals nationwide which are in need
of medical equipment and aspirators.
In 2014, the Company gave priority to education which is a necessary foundation for every member of the
society. However, a number of children have limited educational opportunities, especially small schools in
rural areas of Thailand which did not receive adequate governmental support. Therefore, the Company is
committed to building better educational access and foundation for deprived students and schools through
the 2014 Ichitan Brings Smiles project which saw our employees’ active participation and contribution to
CSR activities for local communities. The project brought benefits to not only underprivileged students in
rural or remote areas but also to the Company’s sustainability and its employees’ sense of community.
The Company made donation in cash and in kind to Kok Sa-nga School in Dong Nonkok Village of Pa-inplang
Subdistrict, Erawan District, Loei Province to provide the school and its student with learning materials, sports
equipment and funds for student scholarships and building construction. The school has 20 teachers/staff
members and 144 students of different ages, from kindergarten to grade 9.
Financial donations have been made to several entities such as Thairath Foundation, mobile breast cancer
X-ray unit of Ayutthaya Provincial Health Office, Chiangrai ASEAN Flowers Festival, Pradabos Schools in
Southern border provinces and charity rallies. The Company also contributed as a beverage sponsor for
events and activities of many schools, educational institutes, public and private organizations and road
show exhibitions.
24
ANNUAL REPORT 2014
Environmental Protection
Cutting-Edge and Green Technology
To pave the way to the greener future, the Company selected the most advanced and eco-friendly production
technology for its Ichitan Green Factory which integrates the cutting-edge cold aseptic filling technology
with the Greenovation design concept to showcase the equilibrium between business and respect for the
nature. We strive to minimize the consumption of natural resources and energy by optimizing the use of
recyclable materials and renewable energy to help preserve and restore the nature through our Ichitan
Green Factory which is built for environmental friendliness.
25
Business Policy and Overview
The Board of Directors of Ichitan Group Public Company Limited is vested with the authority to approve
the Company’s vision, mission, strategies, goals and business plan and budget plan. The Board regularly
meets to continuously monitor the Company’s performance and acknowledge key business progress and
decisions implemented by the management team. In addition, monitoring mechanism and system have
been put in place to facilitate effective supervision, monitoring and assessment of the management team’s
execution to ensure accomplishment of short-term and long-term goals of the Company.
Vision, Objective and Goal
The Company is a mission-led business and aspires to be a leader in the quality beverage business
and innovation and grow sustainably with the quality society. Mr. Tan Passakornnatee has consistently
demonstrated strong commitment towards building a business that can solidly grow and make far-reaching
contribution to the society betterment. To this end, the Company has strived to source the best and quality
ingredients for our drinks from farms of hill tribes with an aim to create legitimate, self-sustaining jobs
for these farmers as well as has invested in the renewable energy system of our production plant for a
greener environment.
Mission
As a mission-led business, the Company aims to offer not only quality products to consumers but also
meaningful contribution to the betterment of the society and the quality of life in synchronized pace with
profitability growth.
For Consumers : Ichitan aims to offer quality drinks which are good for the health of consumers to
maximize their satisfaction.
For Shareholders : Ichitan aims to foster innovation in our business undertaking to continuously
enhance our operational efficiency, develop and expand our distribution channels,
and tap into new business opportunities to optimize our profitability.
For Society
: Ichitan aims to be a role model of a socially responsible organization that gives
For Employees
: Ichitan aims to actively encourage its employees to continuously develop
back to the society for the advancement of Thailand.
themselves into professionals as the development will contribute to their better
life quality and stronger sense of engagement with the organization.
Vision
Ichitan Group Public Company Limited aspires to be a leader in the quality beverage business and innovation
and grow sustainably with the quality society.
26
ANNUAL REPORT 2014
Business Goals
The Company aspires to be a leader in the quality beverage business and innovation and grow sustainably
with the quality society. In the next 5 years, the Company will focus on the development of product quality
and new products to expand our product variety, cater to the consumer demand growth, and enhance our
competitiveness in context of the ASEAN Economic Community (AEC). The Company targets to introduce
3-4 new products each year through our in-house research and development projects and new brand
acquisition as and when appropriate. As work process and operational efficiency improvement is one of
our key priorities, the Company plans to integrate cutting-edge technology with our production platform
to save time, enhance efficiency and contribute to the society.
Major Change and Milestone
Major milestones of the Company are as listed below:
Timeline
Milestones
2010
September 2010
• Established Mai Tan Co., Ltd. on 3 September 2010 with the registered
capital of Baht 500 million and issued 5,000,000 ordinary shares at the par
value of Baht 100 per share.
November 2010
• Entered into an agreement to buy or sell land for a land property in Rojana
Industrial Park in Ayutthaya Province with the area size of 75-3-80 for
factory construction.
• Applied for an investment promotion certificate and other licenses.
December 2010
• Engaged a third party in the production of Ichitan Double Drink product
and launched marketing and promotion campaign for the product.
2011
January 2011
• Introduced Ichitan Double Drink, a functional drink, in 420-ML package
to the market.
March 2011
• EGM No. 2/2011 of the Company approved the registered capital increase
to Baht 600 million through the right issue by offering 6,000,000 ordinary
shares at the par value of Baht 100 per share to existing shareholders.
April 2011
• Earned the investment promotion certificate no. 1496(2)/2554 from the
Board of Investment (BOI)
27
Timeline
Milestones
2011
May 2011
• Introduced Ichitan Green Tea, a ready-to-drink green tea beverage, in
420-ML bottle package to the market.
September 2011
• Started the test-run of the production lines which comprise 1 production
line for bottle type and 1 production line for box type.
October 2011
• Hit by the 2011 flood crisis which inflicted the financial damage worth Baht 1,180.6
million on the Company, partially offset by the initial insurance indemnity of Baht
600 million which reduced the net loss from flood recognized in 2011 to Baht 580.6
million. In the following year, the Company was paid the remaining indemnity
of Baht 518.8 million from the insurer which was additionally recognized as
income in 2012 (net of the loss from building and equipment amortization worth
Baht 50.5 million in 2012)
November 2011
• Changed the Company’s name to Ichitan Group Company Limited.
2012
January 2012
March-April 2012
• Introduced Ichitan Green Tea in 250-ML box package to the market.
• Started the production line for bottle type in March and the production
line for box type in April.
July 2012
• Started a new production line for box type, increasing the production line
for box type to 2.
September 2012
• Started a new production line for bottle type, increasing the production
line for bottle type to 2.
• EGM No. 4/2012 of the Company approved the registered capital increase
to Baht 1,000 million through the right issue by offering 10,000,000 ordinary
shares at the par value of Baht 100 per share to existing shareholders.
• Introduced Ichitan Dragon Black Tea, a ready-to-drink black tea beverage,
in 420-ML package to the market.
• Introduced Ichitan Green Tea in 840-ML package to the market.
2013
28
January 2013
• Divested the food business.
February 2013
• Introduced Yen Yen by Ichitan, a cool herbal green tea drink, in 400-ML package
to the market.
March 2013
June 2013
• Introduced Yen Yen by Ichitan, a cool herbal green tea drink, in 250-ML
box package to the market.
ANNUAL REPORT 2014
Timeline
Milestones
2013
July 2013
• EGM No. 2/2013 of the Company approved the conversion of the Company
into a public limited company, the decrease of the par value from Baht
100 per share to Baht 1 per share, and the registered capital increase to
Baht 1,300 million, divided into 1,300 million shares at the par value of
Baht 1 per share.
2014
March 2014
• Introduced Ichitan Selected, a low-sugar tea drink, in 450-ML package to
the market.
• Introduced Yen Yen by Ichitan, a cool herbal green tea drink, in 240-ML slim
can package to the market.
April 2014
• Listed and traded on the Stock Exchange of Thailand.
May 2014
• Acquired the Bireley’s trademark and beverage formula from Sunny
Herb International Beverage Company.
June 2014
• Discontinued Ichitan Double Drink functional beverage.
July 2014
• Introduced Yen Yen by Ichitan, a cool herbal green tea drink, in 800-ML package
(also known as Giant Yen Yen) to the market.
• Invested in a joint venture in Indonesia.
August 2014
• Introduced Yen Yen by Ichitan, a cool honey-mixed chrysanthemum drink, in
400-ML package to the market.
• Introduced Yen Yen by Ichitan, a cool honey-mixed chrysanthemum drink,
in 250-ML box package and 800-ML bottle package (also known as Giant
Yen Yen honey-mixed chrysanthemum drink) to the market.
September 2014
• Introduced a ready-to-drink honey and lemon green tea beverage, in
• Introduced Ichitan Dragon Black Tea, a ready-to-drink mulberry-flavored
black tea beverage, in 290-ML package to the market.
November 2014
• Introduced a ready-to-drink lychee-flavored green tea beverage, in
29
Shareholding Structure
Ichitan Group Public Company Limited operates beverage business, and manufactures and sells ready-todrink green tea beverage, ready-to-drink black tea beverage, herbal drink, and low-sugar ready-to-drink
tea beverage, under the brands of Ichitan Green Tea, Ichitan Dragon Black Tea, Yen Yen by Ichitan and
Ichitan Selected, respectively.
On 27 August 2014, the Company entered into a joint-venture agreement with PT Atri Pasifik (“AP”), an
Indonesian company, to establish a new entity named PT Ichitan Indonesia to manufacture and distribute
ready-to-drink beverage branded “Ichitan” in Indonesia. The Company and AP will hold equal equity in
the joint venture (50% of the total issued and sold shares of the joint venture). The investment is worth IDR
200,000 million (around Baht 575 million) in total and the Company already injected the initial capital of
Baht 135.6 million, representing 50% of the JV’s paid-up capital. The JV has established since 25 November
2014 and thus, as of 31 December 2014, PT Ichitan Indonesia is a jointly controlled entity of the Company.
Shareholding Structure
Ichitan Group Public Company Limited (ICHI)
Registered Capital: Baht 1,300 million.
Paid-up Capital: Baht 1,300 million.
50%
PT Atri Pasifik
(Co-Venturer)
PT Ichitan Indonesia Company Limited
Registered Capital: IDR 400,000 million
(Approximately Baht 1,184.0 million)
Relationship with Business of Major Shareholder
-None-
30
50%
Nature of Bussiness
ANNUAL REPORT 2014
History
Ichitan Group Public Company Limited (hereinafter referred to as “the Company” or “Ichitan”) which
was formerly known as “Mai Tan Company Limited” has been established since 3 September 2010 with
the registered capital of Baht 500 Million to operate fusion Japanese-styled steak and food restaurant,
Japanese-styled fresh chocolate shop business and beverage business. However, the Company divested
its restaurant business in January 2013 to solely focus on the beverage business as the Company aspires
to be Thailand’s leader of the quality green tea business.
The Company has operated the beverage business since its inception. The first 2 flavors of our functional
drinks branded Ichitan Doubledrink were commercially distributed in January 2011 before Ichitan Green
tea, ready-to-drink green tea beverage, available in 3 different flavors was introduced to the market in May
2011. The products were then manufactured by our sub-contracted partners. Subsequently, the Company
constructed its own production plant with 2 production lines, one for bottle type and another for box type,
at Rojana Industrial Park in Ayutthaya, and test-ran the production lines in September 2011. Unfortunately,
the factory was severely hit by the great flood in October 2011 and thus could not run until early 2012. In
the same year, the Company increased the production capacity of our factory to 4, divided into 2 production
lines for bottle type and another two for box type.
In 2013, the Company invested in a new production line for bottle type, expanding its production capacity
to 3 lines bottle type and 2 line for box type, to meet the growing consumer demand.
In 2014, the Company added a new production line for bottle type to increase the production capacity to 4
production lines for bottle type. Therefore, the Company currently has the production of 800 million bottles
and 200 million boxes per year from its 6 production lines, of which 4 are for bottle types and 2 are for box
types. The Company also offers a wide selection of beverages in 19 different flavors which can be divided
into 4 categories: (1) Ready-to-drink green tea beverage branded “Ichitan Green Tea” (2) Ready-to-drink
black tea beverage branded “Ichitan Dragon Black Tea” (3) Herbal drinks branded “Yen Yen by Ichitan” (4)
Low-sugar tea beverage branded “Ichitan Selected”.
Business Overview
Ichitan Group Public Company Limited has been incorporated since 3 September 2010. The Company’s
registered capital is worth Baht 1,300 million, fully paid up and divided into 1,300 million shares at the
par value of Baht 1.00 each. The Company manufactures and sells ready-to-drink green tea beverage,
ready-to-drink black tea beverage, herbal drink, and low-sugar ready-to-drink green tea beverage under the
brands of Ichitan Green Tea, Ichitan Dragon Black Tea, Yen Yen by Ichitan and Ichitan Selected, respectively.
Regarding the marketing strategy, the Company positions its products as high quality beverage made from
carefully selected, premium quality raw materials. We always ensure that our manufacturing, bottling and
boxing processes meet the food hygiene standards because the consumers’ health and the preservation
of the original taste and flavor are our key concerns. The strengths of our products are as follows:
31
• High quality, healthy drinks made from organic green tea leaves certified by the Department of
Agriculture, Ministry of Agriculture and Cooperatives.
• Trendy packaging with a variety of serving sizes to maximize the consumer’s satisfaction and cater to
the needs of each target group.
• Good flavor as right as Thai taste.
• Brand image as products that foster sustainable growth of the business and the society.
As of 31 December 2014, the total production capacity of the Company was as follows:
• A total of 4 bottling lines with the aggregate capacity of 800 million bottles per year (or about 336 million
liters per year).
• A total of 2 UHT boxing lines with the aggregate capacity of 200 million boxes per year (or 50 million
liters/year).
Currently, our products can be divided into 4 categories which are available both in bottle and box types:
1. Ichitan Green Tea is quality ready-to-drink green tea and is available in 12 selections: (1) Original (2)
Honey Lemon (3) Kikucha (Chrysanthemum) (4) Genmai (5) Sugar-Free (6) Midori Punch (7) Super Berry
(8) Apple-Kiwi (9) Corn (10) Japanese Plum (11) Sugar-Free OoLong Tea (12) Lychee.
2. Ready-to-drink black tea, “Ichitan Dragon Black Tea”, is available in 3 flavors: (1) Lemon (2) Strawberry
(3) Mulberry.
3. The herbal drink “Yen Yen by Ichitan” offers 2 flavors: (1) YenYen cool herb green tea (2) YenYen honeymixed chrysanthemum.
4. Low-sugar “Ichitan Selected” offers 2 flavors: (1) Matcha (2) Oolong
The Company distributes all products through 3 distributors, namely (1) DKSH (Thailand) Co., Ltd.
(2) Boonrawd Asia Co., Ltd. and (3) I Am Green Tea Co., Ltd. which is our related-party.
To protect our customer base from existing traditional trade channels, focusing on the target group that
does not overlap with those of DKSH and Boonrawd Asia, the Company founded I Am Green Tea Co., Ltd.
(IGT) in June 2011 which was 75% owned by Mrs. Eng Passakornnatee (Mr. Tan Passakornnatee’s spouse)
and 25% owned by the Tri Pruek Family which is related to neither the Company nor its executives.
The purpose of establishing IGT is to distribute Ichitan products through the dealers. However, the
Company subsequently shifted its focus only to manufacturing, marketing and branding in order to avoid
distribution-related works which require substantial dedication and resources. Therefore, the Company
agreed to separate IGT from the Company’s business group before proceeding with the SET-listing.
In addition, Mrs. Eng Passakornnatee entirely sold her equity in IGT to Ms. Tanita Passakornnatee (Mr.
Tan’s elder sister) who owns 99.99% shares in O.G.T. Company Limited. Formerly, OGT had distributed
green tea beverage products through the dealer channel for another green tea drink company distribution.
At the present, OGT no longer provides such distribution service to the said green tea drink company and
do not run any competing or related business with Ichitan. OGT earns land lease fees from IGT under the
prior land lease agreement.
32
ANNUAL REPORT 2014
Revenue Structure
The Company’s revenue structure from 2012 - 2014 is as shown below:
Revenue Structure
2012
2013
2014
MB
%
MB
%
MB
%
Net revenue from sales
3,906.8
87.1%
6,484.4
99.3%
6,179.1
99.5%
Net revenue from flood
insurance claims
518.8
11.6%
-
-
-
-
Other revenue
57.3
1.3%
47.5
0.7%
29.8
0.5%
Total revenue
4,482.9
100.0%
6,531.8
100.0%
6,208.9
100.0%
Sales Growth
269.7%
66.0%
(4.7%)
Market Share*
27.1%
42.1%
43.8%
16
17
19
Number of Flavors
Source: Retail Index of Nielsen, January 2015.
The Company’s revenue is primarily from the sales of ready-to-drink tea beverages which stood at Baht
3,906.8 million, Baht 6,484.4 million and Baht 6,179.1 million in 2012, 2013 and 2014, respectively. The said
sales figures accounted for 87.1%, 99.3% and 99.5% of the total sales in 2012, 2013 and 2014 respectively
and were expected to continuously grow.
In 2012, the Company recorded the sales revenue of Baht 3,906.8 million, accounting for 87.1% of the total
revenue, the revenue from flood insurance claims of Baht 518.8 million Baht, which was 11.6% of the total
revenue, and other revenue of Baht 57.3 million which represented 1.3% of the total revenue.
In 2013, the Company achieved the sales revenue of Baht 6,484.4 million or 99.3% of the total revenue and
other revenue of Baht 47.5 million which represented 0.7% of the total revenue.
In 2014, the Company gained Baht 6,179.1 million from sales or 99.5% of the total revenue and its other
revenue totaled Baht 29.8 million or 0.5% of the total revenue.
33
Product and Package
The Company sells beverages in 19 flavors and 8 serving sizes detailed below:
Package
Can
UHT
PET
PET
PET
PET
PET
PET
240 ml 250 ml 290 ml 400 ml 420 ml 450 ml 800 ml 840ml
THB
12
THB
10
THB
10
THB
15
THB
15-20
THB
20
THB
25
THB
25
1.Original
-
-
-
-
✓
-
-
-
2. Honey Lemon
3.Kikucha
(Chrysanthemum)
-
✓
✓
-
✓
-
-
✓
-
✓
-
-
✓
-
-
✓
4.Genmai
-
✓
-
-
✓
-
-
✓
5. Sugar Free
-
-
-
-
✓
-
-
-
6. Midori Punch
-
✓
-
-
✓
-
-
-
7.Corn
-
-
-
-
✓
-
-
-
8. Super Berry
-
✓
-
-
-
-
-
-
9.Apple Kiwi
-
✓
-
-
-
-
-
-
10. Japanese Plum
-
-
-
-
✓
-
-
-
11. Oolong Sugar Free
-
-
-
-
✓
-
-
-
12. TLychee
Black Tea
-
-
-
-
✓
-
-
-
13.Lemon
-
-
-
-
✓
-
-
-
14.Strawberry
-
-
-
-
✓
-
-
-
15.Mulberry
Herb Tea
-
-
✓
-
✓
-
-
-
✓
✓
-
✓
-
-
✓
-
-
✓
-
✓
-
-
✓
-
18. Matcha Low Sugar
-
-
-
-
-
✓
-
-
19. Oolong Low Sugar
-
-
-
-
-
✓
-
-
Price
Green Tea
16. YenYen Cool Herb Tea
17. YenYen Chrysanthemum
Honey
Low Sugar
34
ANNUAL REPORT 2014
BOI Certificate
On 3 September 2013, the Company received the investment promotion certificate number 5175(2)/2556
from the Board of Investment (BOI) (a new certificate issued by the Board of Investment to support the
restoration of business affected by the flood crisis based on the Company’s prior BOI certificate number
of 1496(2)/2554 issued on 27 April 2011). Under the eligibility criterion number 1.11 Businesses related to
food manufacture, food preservation or food additives by using the modern technology applicable to the
business related to sealed vegetable and fruit juice beverages, the Company is entitled to the BOI incentive
as the beverages produced by the Company use green tea leaves as a main ingredient.
Summary of BOI Privileges
• Permission for employment of alien skilled workers and experts.
• Exemption from import duty on machinery.
• Exemption from corporate income tax on the net profit of the business eligible for BOI privilege whereas
the aggregate benefits shall not exceed Baht 6,311.5 million or 150% of the investment value excluding
the land costs and working capital. The benefit amount will vary by the investment value, exclusive
of the actual land costs and working capital as of the commencement date of the entitled business.
As of 31 December 2014, the Company recorded the investment of approximately Baht 4,132.9 million
in buildings and equipment.
• 8-year exemption from corporate income tax on net profit of the entitled business, starting from
16 March 2012 to 15 March 2020.
• Exemption from income tax on dividend by the BOI-supported business throughout the corporate
income tax exemption period.
Key BOI Terms and Conditions
• No mortgage, sales, transfer, lease out or permit other person to use machinery exempted from
the import duty, unless prior permission for the machinery mortgage has been granted.
• Products must meet the international quality standards and certified by ISO 9000 or ISO 14000, or any
other similar certification standards within 2 years from the starting date.
• At least 51% of the total registered capital must be held by Thais.
Distribution Channels
At the present, the Company sells all products through 4 distribution channels as follows:
1. DKSH (Thailand) Co., Ltd. is the main distributor of the Company. Goods distributed by DKSH accounted
for 76.98% of the total sales of the Company in 2014. DKSH mainly distributed products through modern
trade and traditional trade channels. The Company has entered into a long-term distribution contract
with DKSH and has continuously monitored the movement of modern traders in DKSH’s portfolio to
support the Company’s distribution and promotion management.
35
2. I Am Green Tea Co., Ltd. distributed 11.83% of the total sales in 2014, focusing on selling through dealer
networks, restaurants, traditional trade shops, cash vans and other channels not covered by other
distributors.
3. Boonrawd Asia Co., Ltd. distributed 10.88% of the total sales in 2014, focusing on the distributor network,
traditional trade and channel and outlets in Boonrawd’s network.
4. Export to AEC countries such as Laos, Cambodia, Myanmar, etc.
However, the distributors have their exclusive sales territory and networks which do not overlap.
Market and Competition
Competitive Strategy
1. Brand Strategy
As there is minimal differentiation in Thailand’s green tea market in terms of products’ appearance
and taste. Therefore, the outstanding product design and powerful branding are considered key
differentiators and contributors to customer base protection. The Company also aims to position
Ichitan as a quality brand and thus consistently convey such brand image to the market through the
360-degree marketing strategy.
2. Product Strategy
To highlight the standpoint of the quality brand, the Company strictly controls quality in every step
of our process, from the initial steps of research and development and raw materials selection to
the production which employs advanced technology to preserve ingredients’ freshness and deliver
quality products to consumers. In addition, our R&D team is comprised of professional experts in the
beverage field who truly understand customers’ needs and expectation which enable them to develop
new products that match the taste of Thai consumers such the herbal drink “Yen Yen by Ichitan”.
As for packaging, the Company pays attention to the details of package designs that respond to
customers’ needs and the needs for food safety and convenience. We have selected labels that present
modern design to draw attention and urge purchase decision at the point of sale.
3. Effective Inventory and Cost Management
In addition to the economies of scale from the spread of fixed costs such as machinery amortization
and land lease expenses over more units of output, the Company has employed the cold aseptic filling
system, an advanced technology, in our production process to further reduce our production cost.
The technology offers the benefits of (1) lighter materials used (2) longer, continuous production up to
120 hours before each cleaning session which makes production (3) automation features which offers
labor-cost saving advantage. As for the inventory management, the Company has implemented the
automated storage & retrievable system which leads to higher efficiency and lower labor costs. These
factors altogether contribute to the Company’s enhanced efficiency, the ability to immediately respond
to customer’s demand and ultimately our better profitability. The Company has also strived to closely
control and monitor production costs and resource utilization to achieve optimized effectiveness.
36
ANNUAL REPORT 2014
4. Sales and Distribution Management
In order to make our products available to the customers in a timely manner and avoid the issue of
product shortage, the Company has exercised controls throughout the finished goods distribution
process, from the production site to distributors and retailers. The Company has also kept track of and
analyzed sales performance and inventory turnover to support effective stock management. Sales and
marketing strategy has been carefully crafted and customized to the each zone. The Company has
planned to penetrate the AEC markets more aggressively.
5. Marketing and Sales Strategy
Consumer Demand Forecast: Our forecasts of consumers’ demands are based on historical and statistical
data and seasonal factors such as weather conditions, special and festive occasions, competition
environment and the economic situations. The Company has strived to ensure the forecast accuracy
and limit the deviation to 10% at a maximum. Realistic forecasts will contribute to the efficiency of
production and promotional activities.
Marketing and Sales Promotion Plan: The sales of beverage business are subject to seasonal factors
and typically reached a peak in summer. Therefore, to promptly respond to the shift in consumers’
demand, the Company uses the above the line and below the line marketing strategies in summer
months and offers trade discounts to distributors in other months when lower consumption is typically
seen. Furthermore, the Company has implemented the proactive marketing plan to increase our market
shares and concurrently focused on PR communications to portray Ichitan as a quality product brand.
To emphasize our product position, we have 4 different types of sales promotions: sales promotion
specific to retailers, sales promotions specific to distributors, nationwide campaigns, and online sales
promotions. Our annual budget allocation to these activities is based on the sales forecast.
Pricing and Trade Discounts: As mentioned above, ready-to-drink beverage business is sensitive to
seasonal factors. Thus, it is essential for the Company to regularly review and align its trade discount
strategy to the changing market demands. However, the selling price is probably not as flexible due
to the intense competition.
Industry Conditions
As the Company’s primary source of income is the ready-to-drink tea business which accounts for 99%
of the total revenue in 2014, our analysis of industry conditions mainly focuses on the ready-to-drink tea
section.
In 2012, the ready-to-drink tea market was worth Baht 13,177 million, up 39% from the previous year on
the back of the consumers’ purchasing power which surged sharply from 2011 when the flood crisis struck
Thailand.
In 2013, the ready-to-drink tea market recorded the total value of Baht 16,143 million, increasing 23%
from the previous year and achieving the highest growth if compared to other beverage categories. It was
expected that the growth trend would continue its upward movement because in the past 4 years (from
2010 to 2013) the value of the ready-to-drink tea market showed the compound annual growth rate (CAGR)
of approximately 26.75%.
37
In 2014, the ready-to-drink tea market was worth value only Baht 15,405 million in total (excluding the
herbal drink, “Yen Yen”, and the honey-mixed chrysanthemum drink which are categorized as vegetable
and fruit juice drinks and other beverages), shrinking 4.57% from the prior year. This was the first negative
growth of the business in 10 years after its consistent, buoyant growth with the CAGR of around 20.39%
in the prior 5 years (2010 – 2014).
Market Value
20,000
Growth Rate
50%
38.98%
16,143
15,000
15,405
13,177
23.44%
10,000
9,481
21.58%
22.51%
36.25%
22.50%
7,798
6,317
8.75%
5,000
0
-4.57%
2009
2010
2011
2012
2013
Value of Ready-To-Drink Tea Market (MB)
2014
-5%
Growth Rate
The top 3 leaders of ready-to-drink tea market in 2014 was Ichitan, Oishi and Puriku with the market share
of 43.80%, 37.70% and 7.50% respectively. (Source: Retail Index of Nielsen, January 2015)
LIPTON 4%
PURIKU 0.75%
OTHER 7%
ICHI 0.438
ICHI
OISHI
PURIKU
LIPTON
OTHER
OISNI 0.377%
*Remarks: The above market share does not include the herbal drink, Yen Yen and the honey-mix chrysanthemum drink which belong to the category
of vegetable and fruit juice and other beverages.
38
ANNUAL REPORT 2014
The ready-to-drink tea market had seen continuous growth rate until in 2014 when the growth was stemmed
by the domestic political conflicts and the economic conditions which were pressured by the prices of
agricultural commodities which had fallen and the weakened purchase power of consumers. Besides, the
competition had intensified in terms of pricing and promotional campaigns. However, it was expected that
the ready-to-drink tea market can further expand on the back of new market entrants.
Healthy drinks have been increasingly introduced to the market, especially low-sugar drinks, no-sugar
drinks and drinks with natural sweetener which have been designed for health-conscious consumers. As
the consumers’ health has always been one of our focuses, the health awareness trend gives the Company
competitive advantages because we already have a research and development team which has dedicated
the efforts to the development new products that are good for health and at the same time match the needs
of customer, including health-focused consumers. The rise in popularity of healthy drinks will attract more
players to the market and the price competition might ensue. However, the ready-to-drink market still
has strong potential for growth.
The Company strongly believes that the ready-to-drink market will see continuous growth. To expand our
customer base and increase sales performance, we will relentlessly develop and roll out new products
and promotional campaigns. Our strategy includes product differentiation and the introduction of unique,
trendsetting products to the market to offer new choices to customers as evident in the case of the herbal
drink “Yen Yen” by Ichitan, of which sales accounted for more than 18.40% of the total ready-to-drink tea
market value in 2014 (excluding Yen Yen chrysanthemum drink). Our position as No. 1 leader with 43.80%
market share bespeaks the consumers’ confidence in Ichitan’s products.
In 2014, the Company refined its marketing strategy to capture new markets through the launch of new
products such as “Ichitan Selected”, a low-sugar, premium-grade tea drink which targets health-focused
consumers. The premium product has been well-received by consumers and boosted the sales of our
premium product portfolio. Another new product is “Yen Yen” by Ichitan, a honey-mixed chrysanthemum
drink, which offers the pre-eminent taste like no other green tea drinks and has a distinctive quality as a
great refreshment that goes well with hot and spicy foods. Apart from advertisements, the Company used
other marketing tools such as road shows and sales promotions to urge consumers to try out our new
products and widen our customer base.
The Company plans to add more variety to our products by introducing new flavors and products with
natural sweetener. With the wider selection, the Company will be able to sharpen its competitive edge
and increase our market share. In addition, we will continue to adopt integrated marketing approaches
and focus on research and development to concoct great drink formulas that match customers’ needs and
expectation to sustain our position as a solid No.1 leader of the ready-to-drink green tea market.
Product Sourcing
Raw Material Sourching
Besides in-house production capacity, the Company outsources production to external suppliers where
our production capacity is lower than the sales forecast. In the past 4 years (2011-2014), the proportion of
outsourcing activities continuously dropped from 100% in 2011 to 46%, 25% and 9% in 2012-2014, respectively.
39
In 2014, the Company implemented phase 2 of our production capacity increase project which resulted in
the addition of an extra bottling line. It was expected that the outsourcing activities will further decrease
to 2% or lower in 2015.
As regards the sourcing of key raw materials such as tea leaves, fructose, cane sugar, water and flavor
ingredients, the Company has exercised quality control over every step in the pre-production process,
from cultivation to raw material selection and storage, to ensure that all ingredients meet the high-quality
standards. Outsourcing manufacturers have been provided with premix substance to protect the secrecy
of our drink recipe. In addition, as a quality control measure, all manufacturers are provided with detailed
list of ingredients and obligated to use raw materials supplied by vendors on our approved list. In addition,
our quality control team will conduct a monthly inspection to ensure that the goods produced meet our
quality standards.
Organic Tea Leaves: To mitigate the risk of raw material shortage, the Company has developed an annual
production and sourcing plan as well as entered into sale and purchase agreements, usually with the
validity period of 1 year, with suppliers who gather tea leave supplies from farmers. Moreover, to control
the quality of tea leaves, our research and development team jointly supervises the entire process, from
organic farming, tea leave fermentation, harvesting, steaming to pre-delivery storage. The team also check
the quality of tea leave supplies in terms of odor, flavor, weight and color, prior to the manufacturing
process. Then, tea leaves are stored in the temperature chamber to prevent quality deterioration. Tea
leaves supplies are from the Northern region of Thailand where the weather conditions are ideal for tea
leave growing and thus the Company has never experienced tea leave supply shortage. The Company
has entered into sale and purchase agreement with 2-3 suppliers and tea leaves from these supplies are
of equivalent substitutes for each other, given that fact that all products, despite varying flavor additives,
use the same kind of fresh tea leaves and difference between green tea and black tea lies in the way tea
leaves are processed.
Fructose and Sugar: These materials can be easily procured in Thailand and sugar products from different
manufacturers are of comparable quality. Though sugar prices fluctuate at a certain extent with the quantity
supply and the global price movement, the domestic sugar prices are controlled by the government, hence
slight price volatility.
Water: Water used in our production process is supplied by Rojana Industrial Park. The water has been
purified by the reverse osmosis system and treated in accordance with WHO’s 1993 guidelines.
Flavor: Though the flavor additives are only slightly used, it is one of key ingredients as it scents our drinks
and creates first impression of customers towards our products. The Company sources flavor additives
from various suppliers.
Packaging: The Company sources PET bottles, boxes, lids, cartons and labels from reliable suppliers who
successfully meet our selection criteria which also factor in the reliability of the suppliers’ work system.
This provides us with the assurance that the suppliers will be able to punctually deliver quality materials
as agreed upon. The Company also regularly monitors and checks performance and quality of goods
provided by the suppliers.
Natural Gas: The Company has entered into a natural gas sale and purchase agreement with a domestic
supplier. The agreement is valid until 31 August 2018 and can be renewed with a 90-day prior written notice.
40
ANNUAL REPORT 2014
In addition, to reduce the risk from overdependence on suppliers and to obtain the reasonable material
prices, the Company has the policy to purchase raw materials from various major suppliers. In addition,
the Company has forged positive business relationship with raw material suppliers and have never sourced
more than 30% of its total raw material needs from a particular supplier.
Production Process
Major steps in our production processes include tea leaves extracting, brewing, bottling, and quality control.
Every step is controlled through our advanced systems and chemical-free.
Organic tea leaves will be brought to the temperature-controlled extractor and then cooled down. After
precipitation, the tea is strained off and transferred to flavor-mixing station and subsequently the bottling
station. The Company uses the cold aseptic filling system which is the most advanced filling technology
from Japan to preserve the freshness and quality as well as to ensure the food hygiene of our drinks.
The flavor-added beverages will be sterilized at 137 degree Celsius for 4 seconds and then immediately
cooled down to 25 degree Celsius, filled in sterilized packages which include PET bottles and with plastic
lids and boxes.
Every step in the production processes is controlled and recorded by automated systems. The production
line will halt immediately upon irregularity and errors will be reported to production control staff who are
on shift in order to immediately resolve the errors and minimize undesired effects on production.
Quality Assurance and Control
The Company has implemented quality control at every step such as the selection of suppliers, suppliers’
system check, and pre-production quality check. In addition, the “Quality Plan” which is a random quality
check tool under the MIL-STD_105E standard has been used in the inspection of production process. Quality
check of finished products is also performed to ensure compliance with physical, chemical, biological and
sensory standards prior to release from the production site. Besides, the Company encourages continuous
quality improvement by adopting the integrated quality management principles to achieve quality, hygiene
and food safety standards such as GMP, HACCP, ISO9001:2008, HALAL and other internationally-recognized
standards.
Environmental Effect
-None-
41
Risk Factors
•
Risk from linkage between Ichitan brand and Mr. Tan Passakornnatee
Linkage between Ichitan brand and Mr. Tan Passakornnatee who is the Company’s major shareholder
has strategically contributed to the brand recognition and awareness among consumers. The Company
recognizes potential threats consequential to the absence of such linkage and has attempted to mitigate
the risk by strengthen the brand identity without tying it up with any individual. To reach the goal, our
marketing team is phasing out the distinctive presence of Mr. Tan Passakornnatee in new commercials
and advertisements, except for certain new products which the Company intends to convey to the
general public, clients and consumers that they are Mr. Tan’s products.
•
Risk from new product development
Continuous new product development is essential for the Company’s ability to effectively respond to
the evolving needs of consumers. The Company is exposed to the risks associated with new product
development such as substantial investment in the innovation, marketing and PR processes. Therefore,
before the launch of each product, the Company focuses on consumer behavior study, popularity
and demand survey, and analysis of return on investment. The Company has its own R&D laboratory
worth up to Baht 10 million to support our new product development projects which typically are not
costly. The budget for marketing and promotional activities is rather high yet controllable and it is the
Company’s policy to discontinue marketing and promotional campaigns for a new product or a new
product itself if its popularity remains unsatisfactory after more than Baht 50 million has been spent
on its marketing and promotional activities. Marketing and PR expenses of products have been within
the allocated budget which can be revised as and when appropriate.
•
Risk from Shortage and Price Fluctuation of Raw Material
Key raw materials are tea leaves, fructose, cane sugar and flavor ingredients which altogether account
for 30% of the production costs. As the climate change affects agricultural productivity, the Company
might experience raw material shortage and the resultant price fluctuation. To mitigate the risk, the
Company has developed a raw material sourcing plan and the Procurement Department has developed
an annual production and sourcing plan as well as entered into sale and purchase agreements, usually
with the validity period of at least 1 year, with major suppliers to secure adequate raw materials at
reasonable prices. In addition, the Company has made agreements with at least 3 suppliers to avoid
overdependence on any particular supplier as well as to prevent the shortage of raw material in the
event that a suppliers cannot provide the Company with sufficient raw materials. With regard to tea leaves, the Company has entered into tea leave procurement agreement with several
suppliers and tea leaves from these supplies are equivalent substitutes for each other, given the fact
that all products, despite varying flavor additives, use the same kind of fresh tea leaves and difference
between green tea and black tea lies in the way tea leaves are processed. With this, the Company can
effectively avoid overdependence on a particular supplier.
•
Risk from Food Safety Hazard
Food hygiene is among our top priorities as even a minor mistake can have material impact on the
credibility of all Ichitan’s products. We have carefully selected ingredients and supervised every step
42
ANNUAL REPORT 2014
of the production process to achieve the consumer confidence in the quality of our products which
meet international standards such as GMP, HACCP, ISO9001:2008 and HALAL. To assure food safety,
batch samples are tested for 7 days in accordance with applicable standards before the release of each
batch for distribution to the market and the samples are retained as reference. If the test results of the
batch samples indicate contamination, the entire batch will be destroyed. However, our products are
manufactured in closed, hi-tech systems and no food contamination has been found.
•
Risk from Interest Rate Increase
As of 31 December 2014, the Company has the loan obligations worth Baht 1,963 million charged at the
floating interest rate and thus is exposed to the risk of interest rate hike which might have adverse effect
on the Company’s financial performance. In April 2014, the Company launched an IPO and successfully
raised the capital worth Baht 3,900 million. The IPO proceeds were used to repay directors’ loans and
bank loans worth approximately Baht 3,000 million. The decrease of the outstanding loan obligations
with banks to Baht 1,963 million as of 31 December 2014 has significantly reduced the Company’s risk
associated with the interest rate movement.
•
Risk from Dependence on Major Distributors
At present, the Company’s products have been distributed through the modern trade channel (accounting
for 56% of the total sales of the year ended 31 December 2014) and the traditional trade channel
(accounting for 44% of the total sales of the year ended 31 December 2014) by 3 major distributors,
namely DKSH (Thailand) Co., Ltd., I AM Green Tea Co., Ltd., and Boon Rawd Asia Co., Ltd. under the
distribution agreements, of which validity periods range from 3 – 5 years. The distribution volumes of
the distributors for the year ended 31 December 2014 were 77% (DKSH), 12% (I AM Green Tea) and 11%
(Boon Rawd). Based on this fact, the Company is exposed to the risk of overdependence on the major
distributors. The engagement of 3 distributors instead of only 1 distributor in the product distribution
is a means of risk mitigation and the distribution agreement made with DKSH which has been the
original distributor of the Company allows the Company to involve 2 more distributors. Given the
positive relationship between the Company and the distributors and the Company’s strict compliance
with the distribution agreements, the Company is confident that the distributors will agree to renew
their distribution agreements with the Company.
•
Risk from Intense Competition
As the beverage business benefits from the weather conditions of Thailand and has continuously recorded
buoyant growth, many new players have entered the market. This has intensified the competition and
harmed the profitability of manufacturers, especially those with inefficient management system. Pricing
should be suitable and the Company does not support the price cut strategy. Rather, the Company
aims to win customers through creative marketing and promotional campaigns. For the green-tea
products which can hardly be differentiated, the Company aims to make effective production and
logistics management our key strength for higher profit. Product development is another key strength
of Ichitan as evident in “Yen Yen by Ichitan” herbal drink which is unbeatable by any competitors in
terms of its unique taste and brand. The Company targets to launch new fruit juice products under
“Bireley’s” trademark in 2015 to diversify our product portfolio and widen the opportunity horizon.
43
•
Risk from Liability for Excise Tax on Green Tea Beverage
The Company has been exempted from excise tax because the contents of fruit and vegetable juice
mix in our green tea beverage products meet the requirements under the Notification of the Excise
Department Re: Tax exemption criteria and conditions for fruit and vegetable juice beverages. However,
the Excise Department is reviewing the excise tax rates for green tea and if it is concluded that green
tea beverage products are not entitled to tax exemption, all green tea beverage manufacturers will be
adversely affected as the increasing tax burden will hurt their bottom lines. To mitigate such potential
undesirable impact, the Company will focus on cost control, advanced technologies and effective
management which altogether can significantly reduce our operating expenses, thus offsetting the
potential increase in tax expense in the future.
•
Risk from Flood Disaster
The 2011 flood crisis materially affected the Company’s production and distribution plan. Rojana
Industrial Park built a flood wall of 6 meters in height around its compound. The concrete wall base
was 3 meters below the ground level and its top was also 3 meters above the ground level. In addition,
the Company has taken out insurance which covers all possible damage and planned to invest in
overseas joint venture and factory construction.
•
Risk from Majority Control by the Passakornnatee Group
As of 31 December 2014, the Passakornnatee group (inclusive of Mr. Tan Passakornnatee’s nominees),
as the Company’s majority shareholder, owned 60.0% of the total paid-up capital. As the Passakornnatee
group is nearly in full control of the decisions of the shareholders’ meetings, the minority shareholders
might be unable to counterbalance the power of the majority shareholder, except for matters requiring
the three-fourths majority of shareholders. The Passakornnatee group does not have the right to
vote on agenda items concerning related-party transactions related to the Passakornnatee group.
On the one hand, the overwhelming power of the Passakornnatee group contravenes the principle of
good corporate governance. On the other hand, it provides assurance that Mr. Tan Passakornnatee
and his spouse will continue their positions as executives of Ichitan which they have built with their
own hands from scratch. In addition to the Board, the Company also has the Audit Committee and
the Nomination and Remuneration Committee. The scope of authority and duty of the Board and the
committees has been clearly defined. The Audit Committee is comprised of 3 independent directors
who possess business acumen and professional knowledge related to financial statements and reports.
With their professional expertise and qualifications, the independent directors can greatly contribute
to the transparent, effective and verifiable undertakings of the Board and the board committees. The
Company has also established policies governing transactions with related parties, directors, the
majority shareholders, persons with controlling power and persons with potential conflicts of interest
to ensure that transactions are conducted on an arm’s length basis and proposed through the Audit
Committee to the Board for approval. Persons with conflicts of interest shall not be allowed to approve
transactions involving themselves and all related-party transactions will be monitored by the Audit
Committee on a quarterly basis and audited by the internal auditors.
44
ANNUAL REPORT 2014
Operating Assets
The Company’s core operating assets as of 31 December 2014 were:
Property, Plant and Equipment
The Company’s core operating assets as of 31 December 2014 were:
Detail
Value
Ownership Net Book
(MB)
Obligation
1. Land and land improvement
• Land under the title deeds nos. 13425
The Company
and 33355 with the total area size
of 75-3-80 rai. The land is in Rojana
Industrial Park, Zone 8, Uthai, Ayutthaya,
and houses the Company’s production
factory.
265.7
Mortgaged
• Land under the title deed no. 3172 with
The Company
the total area size of 72-0-14 rai. The
land is in Rojana Industrial Park, Zone 8,
Uthai, Ayutthaya.
2.Land and land improvement
The Company
(including interior improvement)
• Factory, office building and other
buildings k under the land title deeds
nos. 13425 and 33355 in Rojana
Industrial Park, Zone 8, Uthai, Ayutthaya.
3. Machinery and plant equipment
The Company
1,736.7
Mortgaged
3,400.9
Mortgaged
• Production machinery of the Company’s
production plant in Rojana Industrial
Park.
4. Furniture and office supplies
The Company
5. Tools
The Company
35.9
54.6
None
None
6. Vehicles
The Company
7. Assets under construction and installation The Company
Total
1.6
1,068.6
6,795.2
None
None
231.2
Remark: Assets as per 1.-3. above have been mortgaged with 3 banks as detailed in 4.5.7. The mortgage value of assets as per 1. and 2. is to Baht
5,687.84 million and that of asset as per 3. is Baht 3,784.50 million.
45
Service Mark
As of 31 December 2014, the Company owns the following 3 service marks:
Service Mark
Registration
No.
Date of
Registration
บ54348
Service Type
Period
12 April 2011
Food and
beverage
บ54349
12 April 2011
Food and
beverage
บ55390
6 October 2011
Food and
beverage
10 years from the date
of registration and
renewable every 10
years
of registration and
renewable every 10
years
of registration and
renewable every 10
years
Trademark
As of 31 December 2014, the Company owns 29 trademarks as follows:
Domestic
Trademark
46
Registration
No.
Date of
Registration
Type of
Product
Kor372021
(Thailand)
30 November 2011
Fruit juice,
syrup, water and
mineral water
Kor372022
(Thailand)
30 November 2011
Kor383448
(Thailand)
30 November 2011
Kor383458
(Thailand)
30 November 2011
Period
of registration and
renewable every 10
years
Coffee, tea,
cocoa, coffee
of registration and
substitute and
renewable every 10
RTD green tea
years
Fruit juice,
of registration and
syrup, water and
renewable every 10
mineral water
years
Coffee, tea,
cocoa, coffee
of registration and
substitute and
renewable every 10
RTD green tea
years
ANNUAL REPORT 2014
Trademark
Registration
No.
Date of
Registration
Kor346374
(Thailand)
5 March 2012
Kor371265
(Thailand)
30 November 2011
Kor386674
(Thailand)
30 November 2011
Kor371264
(Thailand)
30 November 2011
Kor371263
(Thailand)
30 November 2011
Registration
No.
Date of
Registration
Type of
Product
Period
Beer, ale, black
beer, mineral
water, mineral 10 years from the date
water, soda drink, of registration and
non-alcoholic
renewable every 10
beverage, syrup
years
and beverage
ingredient
Coffee, tea,
cocoa, coffee
of registration and
substitute and
renewable every 10
RTD green tea
years
Fruit juice,
of registration and
syrup, water and
renewable every 10
mineral water
years
Fruit juice,
of registration and
syrup, water and
renewable every 10
mineral water
years
Coffee, tea,
of registration and
cocoa, coffee
renewable every 10
substitute and
years
RTD green tea
Overseas
Trademark
11432/2012
(Myanmar)
11433/2012
(Myanmar)
Type of
Product
1 October 2012
Tea, green tea
and tea-mixed
beverage
2 October 2012
Non-alcoholic
beverage
Period
1 October 2012 –
30 September 2015
Renewable upon
agreement expiry
as agreed between
the parties to the
agreement
2 October 2012
– 1 October
2015Renewable upon
agreement expiry
as agreed between
the parties to the
agreement
47
Trademark
Registration
No.
Date of
Registration
Type of
Product
Period
5 September 2012
Tea, green tea
and tea-mixed
beverage
of registration and
renewable every 10
years
5 September 2012
Tea, green tea
and tea-mixed
beverage
of registration and
renewable every 10
years
14 January 2013
Tea, green tea
and tea-mixed
beverage
of registration
22 January 2013
Tea, green tea
and tea-mixed
beverage
of registration
27068
(Lao)
10 May 2013
Tea, green tea
and tea-mixed
beverage
of registration
27069
(Lao)
10 May 2013
Non-alcoholic
beverage
of registration
302787788
(Hong Kong)
1 November 2013
Tea, green tea
and tea-mixed
beverage
of registration
302787779
(Hong Kong)
1 November 2013
Non-alcoholic
beverage
of registration
49533/14
(Cambodia)
1 January 2013
Tea, green tea
and tea-mixed
beverage
of registration
49534/14
(Cambodia)
1 January 2013
Non-alcoholic
beverage
of registration
2012056944
(Malaysia)
5 September 2012
Tea, green tea
and tea-mixed
beverage
of registration
2012056945
(Malaysia)
5 September 2012
Non-alcoholic
beverage
of registration
01650792
(Taiwan)
16 June 2014
Tea, green tea
and tea-mixed
beverage
of registration
01650792
(Taiwan)
16 June 2014
Non-alcoholic
beverage
of registration
T1213049I
(Singapore)
T1213048J
(Singapore)
011159068
(27 Eurozone
countries)
971686
(New Zealand)
48
ANNUAL REPORT 2014
Trademark
Registration
No.
Date of
Registration
48,220
(Brunei)
10 July 2012
48,220
(Brunei)
10 July 2012
1512052
(Australia)
10 September 2013
1512052
(Australia)
10 September 2013
Type of
Product
Tea, green tea
and tea-mixed
beverage
Non-alcoholic
beverage
Tea, green tea
and tea-mixed
beverage
Non-alcoholic
beverage
Period
of registration
of registration
of registration
of registration
Bireley’s
As of 31 December 2014, the Company owns 25 trademarks as follows:
Trademark
Registration
No.
351117
(Thailand)
369430
(Thailand)
425983
(Thailand)
351116
(Thailand)
Date of
Registration
Type of
Product
Period
16 May 2014
Coffee, tea,
cocoa, chocolatemixed drink,
candy, ice cream,
of registration and
flavored ice and perpetually renewable
flavor essence
every 10 years.
excluding
essential oil
16 May 2014
Bottle
of registration and
perpetually renewable
every 10 years.
16 May 2014
Juice-mixed
beverage, noncarbonated soda
and carbonated
soda, fruit juice
of registration and
every 10 years.
16 May 2014
Flavored milk,
yoghurt, frozen
yoghurt and
marmalade jam
of registration and
every 10 years.
49
Trademark
Registration
No.
425984
(Thailand)
434390
(Thailand)
434389
(Thailand)
369670
(Thailand)
348221
(Thailand)
17134
(ประเทศเวียดนาม)
KH/3279/93
(Cambodia)
40-319639
(Korea)
50
Date of
Registration
Type of
Product
Period
16 May 2014
Juice-mixed
beverage, noncarbonated soda
and carbonated
soda, fruit juice
of registration and
every 10 years.
16 May 2014
Soda, mineral and of registration and
carbonated drink perpetually renewable
every 10 years.
16 May 2014
every 10 years.
16 May 2014
of registration and
every 10 years.
Bottle
16 May 2014
every 10 years.
30 September
2014
Beer, mineral
water,
soda drink,
nonalcoholic
of registration and
beverage,
juice drink, juice,
every 10 years.
syrup and drink
ingredient
21 July 2014
Beer, mineral
water,
soda drink,
nonalcoholic
of registration and
beverage,
juice drink, juice,
every 10 years.
syrup and drink
ingredient
30 May 2014
of registration and
every 10 years.
Soda drink
ANNUAL REPORT 2014
Trademark
Registration
No.
40-43998
(Korea)
8051/2014
(Myanmar)
T5316335I
(Singapore)
T5316336G
(Singapore)
T7460498B
(Singapore)
620267
(Taiwan)
636051
(Taiwan)
778887
(India)
Date of
Registration
30 May 2014
27 June 2014
Type of
Product
Period
Ice
of registration and
every 10 years.
Beer, mineral
water, soda drink,
non-alcoholic
of registration and
beverage, juice
drink, juice,
every 10 years.
syrup and drink
ingredient
16 June 2014
Coffee, tea,
cocoa, coffee
substitute and
RTD green tea
of registration and
every 10 years.
16 June 2014
Coffee, tea,
cocoa, coffee
substitute and
RTD green tea
of registration and
every 10 years.
16 June 2014
18 June 2014
Beer, mineral
water, carbonated
drink, non10 years from the date
alcoholic
of registration and
beverage, juice perpetually renewable
drink, juice,
every 10 years.
syrup and drink
ingredient
Milk, milk
powder, butter,
yoghurt and
cheese
of registration and
every 10 years.
18 June 2014
น�้ำแข็ง, ไอศครีม, น�้ำ 10 years from the date
ผลไม้, น�้ำ, น�้ำแร่, ชา, of registration and
กาแฟ,โกโก้, โคล่า perpetually renewable
และสปอร์ตดริ้งค์
every 10 years.
30 May 2014
กาแฟ, ชา, โกโก้,
กาแฟเทียม,ชาเขียว
พร้อมดื่ม
of registration and
every 10 years.
51
Trademark
Registration
No.
Date of
Registration
778888
(India)
30 May 2014
4-2001-00259
(Philippines)
30 May 2014
19741340
(Hong Kong)
30 December 2014
19500327AB
(Hong Kong)
19520606AA
(Hong Kong)
Type of
Product
Period
Beer, mineral
water, soda drink,
non-alcoholic
of registration and
beverage, juice
drink, juice,
every 10 years.
syrup and drink
ingredient
Non-carbonated
of registration and
drink
every 10 years.
Non-alcoholic
of registration and
beverage, juice
and soda drink
every 10 years.
30 December 2014
Syrup and
non-carbonated
drink
of registration and
every 10 years.
30 December 2014
Food ingredient,
mineral water
and root beer
of registration and
every 10 years.
All other products are in the trademark registration process.
Intangible Asset
As of 31 December 2014, the Company’s intangible assets are software worth Baht 2.5 million and the
exclusive right to use the trademark worth Baht 84.1 million, totaling Baht 86.6 million.
Summary of Agreements
1. Manufacturing Agreement
52
The Company entered into manufacturing agreements with various manufacturers to manufacture beverage
products of the Company. The agreements include provisions about the product manufacturing and delivery
specifications, beverage formula, rights to the beverage formula (prior written consent from the Company
is required for use of the Company’s product formula), protection of business confidentiality, prices, and
payment terms. Generally, the agreements have the term of 1 year from the signing date. Each party to
the agreement has the right to terminate the agreement in the event of agreement breach. The parties to
the agreement may agree on the renewal upon the agreement expiry.
ANNUAL REPORT 2014
2. Raw Material Supply Agreement
The Company has entered into raw material supply agreements with several suppliers of key raw materials
such as tea leaves, syrup, white sugar and artificial flavors. The agreements include specifications of raw
materials, prices and payment terms. Generally, the agreements have the term of 1 year from the signing
date. Each party to the agreement has the right to terminate the agreement in the event of agreement
breach. The parties to the agreement may agree on the renewal upon the agreement expiry.
3. Package Supply Agreement
The Company has entered into package supply agreements for preform and UHT boxes and labels with
several suppliers. The agreements include provisions about the package specifications, prices, payment
terms and delivery. Generally, the agreements have the term of 1-3 years from the signing date. Each party
to the agreement has the right to terminate the agreement in the event of agreement breach. The parties
to the agreement may agree on the renewal A) upon the agreement expiry or B) perpetual renewal until
an agreement termination notice is given.
4. Natural Gas Purchase and Sale Agreement
The Company has entered into a natural gas purchase and sale agreement with PTT Natural Gas Distribution
Company Limited with the term of 7 years and the quantity and price of natural gas supply have been fixed
throughout the agreement term. The parties to the agreement agree to conclude the terms and conditions
of each agreement within 30 calendar days prior to the agreement expiry; otherwise it shall be deemed
that the agreement is terminated upon its expiry date.
5. Land and Office Lease Agreement
Counterparty
Office Building Lease...
Agreement
• Lessee: Ichitan
Group Pcl.
• Lessor: Charn Issara
Development Pcl.
Location
Condition/Fee
• 28th Fl., Charn
• Lease fee of Baht
Issara Tower II,
2,712/month
28th Fl. (corridor)
with the area size of
13.56 sq.m.
Period
• 11 August 2013 –
10 August 2016
• Renewable upon
agreement expiry
as mutually agreed
between the parties
to the agreement
Agreement date:
11 August 2013
53
Counterparty
Office Building Lease...
Agreement
• Lessee: Ichitan
Group Pcl.
• Lessor: Bangkok
Commercial
Property Fund
Location
Condition/Fee
• 28th Fl., Charn
• Lease fee of Baht
Issara Tower II, Unit
180,310/month
F28/A (partial), B, C,
D, 2922/300 (partial),
and 2922/301-303
with the area size of
901.55 sq.m.
Period
• 11 August 2013 – 10
August 2016
• Renewable upon
agreement expiry
as mutually agreed
between the parties
to the agreement
Agreement date:
11 August 2013
6. Distributor Agreement
Counterparty
Distributor Agreement...
Manufacturer: Ichitan Group Pcl.
Distributor: Boonrawd Asia Co.,
Ltd.
Agreement date: 9 October 2014
Distributor: DKSH (Thailand) Co.,
Ltd.
Agreement date: 14 January 2011
Condition
• To be the sole distributor
for RTD beverage products
listed in the agreement
and its appendix and
amendments at the agreed
prices.
Period
• 1 November 2014 – 30 October
2017
• Renewable upon each
agreement expiry.
• In the event of agreement
breach, a party to the
• All distribution channels in
agreement which does
Thailand, except for modern
not breach the agreement
trade channel.
may initiate the agreement
cancellation.
• 1 February 2011 – 31 January
2016
for beverage products listed
in the agreement and its
appendix and amendments • Automatic renewal for 3
years, unless a party to the
at the agreed prices.
agreement notifies another
party of its intent not to renew
• All distribution channels
the agreement at least 6
in Thailand, inclusive of
months prior to the agreement
modern trade and traditional
expiry.
trade channels.
cancellation.
54
ANNUAL REPORT 2014
Counterparty
Condition
Period
• 1 July 2014 – 30 June 2017
for beverage products listed
• Renewable upon each
in the agreement and its
agreement expiry.
appendix and amendments
Distributor: Ichitan Trading Co., Ltd.
at the agreed prices.
(currently I Am Green Tea Co., Ltd.)
• All distribution channels in
Agreement date: 20 June 2014
Thailand, except for modern
trade channel.
cancellation.
7. Loan Agreement
Loan agreement with Bank No. 1 worth Baht 972.0 million
Signing date
4 April 2012
Agreement ..
Loan agreement and the annex to the loan agreement dated 4 April 2012
Borrower ..
Ichitan Group Pcl.
Purpose ..
To finance the land acquisition and development costs and machinery
acquisition costs
Facility ..
Long-term loan worth Bath 972.0 million maturing on 31 March 2021
Interest rate (%)..
Initial drawdown – 31 December 2012
4.0%
1 January 2013 – 31 March 2015
MLR - 2.3%
After 31 March 2015
MLR – 2.1%
Term of repayment ..
• Monthly repayment, starting from April 2014:
April 2014 – March 2015: Baht 1.7 million/month
April 2020 – February 2021: Baht 15.9 million/month
March 2021: Baht 24.3 million
• Interest payment shall be made monthly on the last business day of each
month, starting from the month the initial drawdown is made.
55
Collateral ..
• Mortgage of machinery and equipment.
• Mortgage of land and buildings under the following title deeds:
Existing collateral as per the agreement dated 29 March 2011 for the loan worth
Baht 1,663.0 million
- Title deeds nos. 13425 and 33355 of the lands in Ayutthaya owned by Ichitan Group Pcl., with the mortgage value of Baht 3,765.5 million.
• Debt service coverage ratio (DSCR)*: 1.25x
Key terms and ..
conditions
• Debt to equity ratio (D/E**): 2.8x
• Mr. Tan Passakornnatee and his family must maintain the shareholding at
30% of the registered capital or higher.
Loan agreement with Bank No. 1 worth Baht 600.0 million
Signing date
14 October 2014
Agreement
Loan agreement
Borrower
Ichitan Group Pcl.
Purpose
To finance the machinery investment for bottled drink production
Facility
Long-term loan worth Baht 600 million
Interest rate (%)
Initial drawdown – final installment
Term of repayment ...
• Monthly repayment, starting from October 2015:
BIBOR (6M) +1.25 p.a.
a. Installments 1-83: Baht 7.14 million/installment
b. Final installment: The remaining amount
• Interest payment shall be made monthly at the end of each month, starting
from the month the initial drawdown is made.
Collateral...
Existing collateral as per the agreement dated 29 March 2011 for the loan worth
Baht 1,663.0 million
- Title deeds nos. 13425 and 33355 of the lands in Ayutthaya owned by Ichitan
Group Pcl., with the mortgage value of Baht 3,765.5 million.
Key terms and ..
conditions
56
ANNUAL REPORT 2014
Loan agreement with Bank No. 2 worth Baht 1,860.0 million
Signing date...
Agreement...
20 August 2012
Bridge Loan Credit Facility Agreement and Guarantee Agreement
Medium-Term Loan Credit Facility Agreement and Guarantee Agreement
Borrower...
Purpose...
Revolving Credit Facility Agreement and Guarantee Agreement
Ichitan Group Pcl.
• Bridge loan credit facility agreement and guarantee agreement for the
acquisition of machinery and equipment (uncommitted credit line
• Medium-term loan credit facility agreement and guarantee agreement to
finance the repayment of the bridge loan which finances the machinery
investment in new production line and automated storage system
(uncommitted credit line)
Credit limit...
Interest rate (%)
• Revolving credit facility agreement and guarantee agreement for use as
working capital, equipment acquisition, and L/G for electricity and import
duty expenses (uncommitted credit line)
Bridge Loan
Medium-Term Loan
Revolving Credit
Baht 990.0 million
Baht 770.0 million
Baht 100.0 million
L/T: BIBOR + 1.0%
USD facility: SIBOR (6M) + BIBOR (6M) + 1.25%
1.5%
O/D: MOR-2.5%
THB facility: BIBOR (6M) +
LG: 1.0%
1.25%
Facility in other currencies:
Term of repayment...
Cost of finance + 1.50%
360 days. The outstanding
of bridge loan will be
refinanced as a term loan
which shall not exceed
the forced sale value of
collateral.
5 years from the initial
drawdown (the loan must
be drawn by 22 February
2014).
-
Quarterly repayment
shall be made in 19
installments. The first
repayment shall be made
within 6 months from the
initial drawdown.
57
Collateral...
Key terms and...
conditions
• Mortgage of machinery and equipment owned
by Ichitan Group Pcl. with the mortgage value
of Baht 924 million.
• Second mortgage of the land in Ayutthaya owned
by Ichitan Group Pcl., under the title deeds nos.
13425 and 33355, with the mortgage value of
Baht 20 million.
• Maintenance of the borrower’s businesses, including all rights, privileges
and franchises rights.
Loan agreement with Bank No. 3 worth Baht 1,000.0 million
Signing date
12 July 2013
Agreement
Loan agreement
Borrower
Ichitan Group Pcl.
Purpose
To finance the production machinery acquisition for Phase 2 of the project
Facility
Long-term loan worth Baht 1,300.0 million with the tenor of 7 years
Interest rate (%)..
Years 1-2
CIMB T’s MLR - 2.625%
Years 3 onwards
CIMB T’s MLR - 2.0%
Term of repayment..
• Grace period of 12 months from the initial drawdown.
• Bullet repayment with monthly repayment of Baht 25.0 million.ย
• Interest payment on 1st of each month, starting from the month the initial
drawdown is made.
Collateral..
Third mortgage of the land in Ayutthaya owned by Ichitan Group Pcl. under the
title deeds nos. 13425 and 33355 with the mortgage value of up to Baht 1,902.3
million (pending mortgage registration).
Key terms and..
conditions
• Dividend payment is prohibited where DSCR is below 1.25x. If DSCR is higher
than 1.25x, the Company is unconditionally allowed to make dividend payment
following its SET-listing in accordance with its Dividend Policy and performance
and the economic conditions.
58
ANNUAL REPORT 2014
Key terms and..
conditions
• The borrower agrees not to materially change the major shareholders or the
management structure whereas Mr. Tan Passakornnatee must and his family
must maintain the shareholding at 30% of the registered capital or higher.
In addition, Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee must be
the chairman and the member of the Executive Committee of the Company
throughout the loan period, unless changes thereto are notified to and approved
by the lender in advance. (The IPO launch had been approved by the lender.)
8.Insurance
• Production Plant in Ayutthaya
The Company has taken out insurance with Siam Commercial Samaggi Insurance Pcl. for protection
of the plant and properties as detailed below:
Factory
Phase 1
Phase 2
Signing date
29 May 2014
Type of insurance
Property insurance
Coverage
29 May 2014 – 29 May 2015
Sum insured
Baht 5,700 million
The insured
Ichitan Group Public Company Limited
Insured location
111/1 Moo 4, Rojana Industrial Park, Zone 3, Uthai, Ayutthaya
Insured properties
1. Buildings, walls, fences and utilities
2. Machinery and parts, tools, and equipment and spare parts
3. Furniture, fixture, and office equipment and supplies
4. Raw materials, inventory, and all packages
5. Other properties of the insured
Perils covered
Fire, lightning, explosion, aircraft damage, water damage, impact damage from
vehicles, smoke, storm, bush fire, flood, hail, earthquake, volcano eruption,
tsunami, strike, riot, malicious damage, spontaneous combustion or natural
explosion and unexpected accidents caused by external factors or any other
perils not specified as exceptions in the GIA form.
59
Factory
Phase 1
Phase 2
Terms and conditions Excess
1) Baht 5,000 for each and every loss, except for loss caused by fire, lightning,
explosion, impact damage from vehicles, aircraft damage and smoke.
2) A minimum of Baht 10,000 or 10%, whichever is higher, of the loss caused by each
and every accident to properties, machinery and electrical breakdown, boiler and
pressure vessel damage, damage to electronic devices, computers and processors,
theft without forcible entry, robbery and burglary.
3) A minimum of Baht 100,000 or 10%, whichever is higher, of the loss to properties
caused by each and every accident which includes flood, storm, hail, earthquake,
volcano eruption or tsunami, strike, riot or malicious act.
• Office Building
The Company has taken out insurance LMG Insurance Pcl. for partial protection of the head office
located at Charn Issara Tower II as detailed below:
Factory
Phase 1
Phase 2
Signing date
1 January 2014
Type of insurance
Property insurance
Coverage
1 January 2014 – 1 January 2015
Sum insured
Baht 10 million
The insured
Insured location
2922/301-303, 28th Fl., Charn Issara Tower II, New Petchburi Road, Bangkapi,
Huaykwang, Bangkok, 10310
Insured property
Furniture, fixtures, office supplies and equipment, computers, electrical appliance,
and accessories of shops and other properties of the insured (exclusive of
computers, laptops, iPod, iPad, tablets and other accessories)
Perils covered
Fire, lightning, storm, earthquake, volcano eruption, tsunami, hail, water damage,
impact damage from vehicles, aircraft damage, smoke, explosion, strike, riot,
malicious damage and unexpected accidents caused by external factors or any
other perils not specified as exceptions in the GIA form.
Limited liability: The maximum flood coverage shall be Baht 1,000,000 per flood
claim and throughout the coverage period.
Other conditions
Excess
1) Baht 5,000 for each and every loss caused by external factors, except for perils
covered by this insurance policy.
2) 10% or a minimum of Baht 100,000 per claim and for every flood claim.
60
ANNUAL REPORT 2014
Policy on Investment in Subsidiaries and Associate Companies
As the Company’s management team is highly experienced in beverage business, the Company has a
policy to focus on beverage business investments, excluding alcoholic beverage, at the proportion which
allows the Company to have the authority to manage and set business direction for entities in which it has
invested. The Company does not have a plan to make any new investment in the near future.
61
Legal disputes
Company and the subsidiaries had no legal dispute that significantly affected the Company’s business or
posed negative effects on the Group’s assets of which its overall value, as at 31 December 2014, was higher
than 5% of shareholders’ equity. The Company and the subsidiaries had no legal dispute arisen from an
out-of-the-ordinary course of business of the Group either.
62
ANNUAL REPORT 2014
Information of Securities and
Shareholders
Ordinary Shares
Registered and paid-up capital as of 31 December 2014
Registered capital is worth Baht 1,300,000,000 (one billion three hundred million baht), divided into
1,300,000,000 shares (one billion three hundred million shares) at the par value of Baht 1.00 per share.
Paid-up capital was worth Baht 1,300,000,000 (one billion three hundred million baht), divided into
1,300,000,000 shares (one billion three hundred million shares) at the par value of Baht 1.00 per share.
Shareholders
Major shareholders per the shareholders register as of 28 August 2014:
No.
1
2
3
4
5
6
7
8
9
10
11
Name-Surname
Shareholders in Mr. Tan and
Mrs. Eng Passakornnatee’s
Group
Mr. Jaruworn Sukpanthaworn
Miss Supanee Sukpanthaworn
Mr. Jaruwat Sukpanthaworn
Miss Varisa Passakornnatee
Mrs. Jamnien Sukpanthaworn
Miss Tantita Passakornnatee
Miss Sukanya Sukpanthaworn
Total shares held by
shareholders in Mr. Tan and
Group
Nominee of Mr. Tan
Passakornnatee
Miss Supaporn Jaroensopa
Miss Jinda Songrod
No. of Share
%
180,000,000
120,000,000
88,767,200
40,473,000
40,000,000
30,000,000
5,150,000
1,280,000
1,250,000
13.85
9.23
6.83
3.11
3.08
2.31
0.40
0.10
0.10
506,920,200
38.99
80,370,000
50,518,000
6.18
3.89
63
No.
Name-Surname
No. of Share
%
12
13
14
15
Miss Wanwimon Nilpruek
Miss Nisakorn Induang
Miss Vichitra Hematurin
Miss Araya Panichayanon
Total shares held by nominees
of Mr. Tan Passakornnatee
Total shares held by
shareholders in Mr. Tan and
Group and nominees of Mr.
Tan Passakornnatee
Mr. Chiu Yueh-Chin
80,370,000
40,205,000
40,107,500
20,926,600
6.18
3.09
3.09
1.61
272,487,100
272,487,100
779,407,300
62,842,000
59.95
4.83
16
Other Securities
-None-
Dividend Policy
The Company will pay dividend at the rate of at least 40% of net profits after corporate income tax and legal
reserve. The dividend payment shall be made at least once each year based on the Company’s consolidated
financial statements, subject to the shareholders’ approval.
However, all dividend payments are subject to cash flows, investment plans, economic conditions, operating
results, financial performance, liquidity of the Company and other factors as appropriate and necessary
for the Company’s future business. The dividend payment shall not exceed the retained earnings shown in
the separate financial statements of the Company and/or shall not have material impact on the Company’s
normal business operations. The Board of Directors shall have the power to approve the interim dividend
payment and shall report the matter to the subsequent shareholders’ meeting.
In 2014, the Company paid the dividend from 2014 operating results and retained earnings at the rate of
Baht 1.00 per share. The interim dividend at the rate of Baht 0.50 (fifty satang) was approved by the Board
Meeting on 13 August 2014 and paid to the shareholders on 12 September 2014, totaling Baht 650 million.
The final dividend payment at the rate of Baht 0.50 (fifty satang) was approved by the Board Meeting No.
1/2015 on 25 February 2015 and will be paid to the shareholders on 25 May 2015, totaling Baht 650 million
64
ANNUAL REPORT 2014
and subject to the shareholders’ approval. Thus, the total dividends amounted to Baht 1,300 million or 120.5%
of the 2014 net profit. Such dividend payments are in accordance with the Company’s Dividend Policy.
Dividend Payments
Detail
2014
Dividend (Baht per share)
Interim dividend
Final dividend
Dividend payout ratio
1.00
0.50
0.50
120.50
65
Management Structure
Board of Directors
Nomination and
Risk Management
Committee
Audit Committee
Internal Audit
Mr. Sumol Hobamphen
Executive Committee
CEO
Mr. Tan Passakornnateee
Mrs. Eng Passakornnateee
Consultant
Design
Department
Executive Vice President
Accounting & Finance
Mr. Preecha Augcharanonda
Beverage Department
Mr. Tanapan Khongnuntha
Vice President
Accounting & Finance
Mr. Apichat Sukachirawat
Senior Vice President
Beverage Department
Marketing
Communication
Department
Legal
Department
Remark: Mr. Chiu Yueh-Chin is the Company’s production consultant
66
Human
Resources
Department
Factory Department
Mr. Viroj Supasoon
Procurement
Department
Marketing
Communication
Department
ANNUAL REPORT 2014
Ichitan Group Public Company Limited has the Board of Directors and the Audit Committee which have
distinct and clearly defined scope of duties and responsibilities as follows:
Board of Directors
As of 31 December 2014, the Board is composed of 9 directors:
1. Mr. Tan
2. Mrs. Eng
3. Mr. Chiu
4. Mr. Viroj
5. Mr. Tanapan
6. Miss Araya
7. Avm. Nathawat
8. Mr. Prasan
9. Mr. Issarachai
10. Mr. Apichat
Passakornnatee
Passakornnatee
Yueh-Chin*
Supasoon
Khongnuntha
Panichayanon
Nimmolthanakorn**
Limpipatanakul
Decharit
Sukachirawat
Chairman
Vice Chairman
Director
Director
Director
Director
Independent Director and Chairman of Audit Committee
Independent Director and Audit Committee
Independent Director and Audit Committee
Company Secretary
Remark:
* The Board Meeting No. 3/2014 dated 13 August 2014 resolved to appoint Mr. Chiu Yueh-Chin as a director in replacement for Mr. Preecha
Augcharanonda who resigned as director on 13 August 2014.
**Avm. Nathawat Nimmolthanakorn is formerly known as Avm. Paitoon Reejinda.
Authorized Signatories
Mr. Tan Passakornnatee or Mrs. Eng Passakornnatee shall co-sign with Mr. Chiu Yueh-Chin or Mr. Viroj
Supasoon or Mr. Tanapan Khongnuntha or Miss Araya Panichayunont and affix the Company’s seal to
legally bind the Company.
Scope of Authority, Duty and Responsibility of Board of Directors
1. The Board has authority, duty and responsibility to manage and operate the Company’s business
according to laws, objectives, Articles of Association, the resolution of the shareholders’ meeting with
honesty and due care to protect the Company’s benefits.
2. To hold a Board meeting at least once every 3 months.
3. To ensure that the balance sheet and income statement of the Company as of the end the accounting
period are audited and proposed to the shareholders’ meeting for approval.
4. To review and approve the Company’s policies, directions, strategies and business plans proposed
by the management team.
5. To formulate the enterprise-wide Risk Management Policy and to monitor the risk management systems
and procedures to effectively mitigate and control the risk impact on the Company’s business.
67
6. To set the directions, policies, business plans and budget plans and undertake monitoring and
supervision of the business operations executed by the management team to ensure effective and
efficient implementation of such policies, business plans and budget plans.
7. To approve the management structure and the appointment and authority scope of the Executive
Committee, CEO and other committees as appropriate.
The appointment and authority delegation shall in no way empower the Executive Committee to consider
or approve transactions that may have conflicts of interest between the Company and affiliates, unless
specific guidelines for handling such transactions that have been approved by the Board are complied with.
8. To prepare the Board’s annual report and to be responsible for the preparation and release of the
Company’s financial statements to disclose the financial positions and performance in the past year
which shall be approved by the shareholders’ meeting.
9. The Board may delegate to a director or directors or other persons the authority to perform acts on
its behalf and under its supervision or may authorize that person perform any duties during a specific
period. The Board may cancel, revoke or change the authorization when appropriate. The Board may
delegate a director, directors or other persons to perform acts on its behalf and under its supervision;
or delegate to such persons the authority within the scope as the Board deems appropriate. Such
delegation may be annulled or amended or re-assigned to other persons as the Board deems appropriate.
Such delegation shall not explicitly or implicitly vest such persons with the power to consider and
approve transactions involving conflict of interest between themselves or their related parties and
Company or its subsidiaries (if any) (according to the definitions under the notifications issued by the
Capital Market Supervisory Board and/or the SET and/or other relevant authorities), unless otherwise
permitted by applicable policies and criteria previously approved by the Board.
The Board held 9 meetings in 2013 and 5 meetings in 2014 and details of the meeting attendance are as
shown below:
Name - Surname
1. Mr. Tan Passakornnatee
3. Mr. Preecha Augcharanonda
4. Mr. Chiu Yueh-Chin
5. Mr. Viroj Supasoon
7. Ms. Araya Panichayanon
8. AVM. Nathawat Nimmolthanakorn
68
Board of Directors
2013
9/9
9/9
8/8
8/8
7/8
8/9
8/8
8/8
8/8
2014
5/5
5/5
2/2
4/4
5/5
5/5
5/5
5/5
5/5
4/5
ANNUAL REPORT 2014
Audit Committee
As of 31 December 2014, the Audit Committee is composed of 3 members:
1. Avm. Nathawat
2. Mr. Prasan
3. Mr. Issarachai
Mr. Sumol Nimmolthanakorn
Limpipatanakul*
Decharit
Hobumphen
Chairman of Audit Committee and Independent Director
Audit Committee Member and Independent Director
Audit Committee Member and Independent Director
Secretary to Audit Committee
Notation: * Mr. Prasan Limpipatanakul has knowledge and experience in accounting and finance.
Scope of Authority, Duty and Responsibility of Audit Committee
1. To review the Company’s financial reporting to ensure the accuracy and adequacy thereof.
2. To review the appropriateness and effectiveness of the Company’s internal control and internal audit
systems, assess the independence of the internal audit team, and endorse the appointment, job transfer
and employment termination of head of internal audit team or any other teams responsible for the
Company’s internal audit.
3. To review and ensure the Company’s compliance with the Securities and Exchange Act, the SET’s
requirements and the laws governing the Company’s business.
4. To consider, screen and nominate an independent auditor, propose audit fee and attend a meeting with
the auditor without management’s participation at least once every year.
5. To review connected transactions and transactions with potential conflicts of interest in accordance with
the laws and the SET’s requirements to ensure that such transactions are reasonable and contribute
to the Company’s best interest.
6. To prepare the Audit Committee’s Report which is part of the Company’s annual report. The Audit
Committee’s Report must be signed by the Chairman of the Audit Committee and entails, at a minimum,
the following:
(a) Opinions on the accuracy, completeness and reliability of the Company’s financial statements.
(b) Opinions on the adequacy of the Company’s internal controls.
(c) Opinions on the Company’s compliance with the Securities and Exchange Act, the SET’s rules and
requirements and other laws applicable to the Company’s business.
(d) Opinions on the suitability of the auditor.
(e) Opinions on transactions with conflicts of interest.
(f) Number of the Audit Committee’s meetings and attendance report of each Audit Committee member.
(g) Opinions or observations of the Audit Committee on matters gained from their performance of duties
under the Audit Committee’s charter.
(h) Any other items which the Audit Committee views that should be made known to the shareholders
and the general investors in accordance with the scope of duties and responsibilities assigned by
the Board.
69
7. Perform any other duties as assigned by the Board, subject to the Audit Committee’s approval thereof.
The Audit Committee held 9 meetings in 2013 and 5 meetings in 2014 and details of the meeting attendance
are as shown below:
Audit Committee
Name - Surname
1.Avm. Nathawat Nimmolthanakorn
2.Mr. Prasan Limpipatanakul
2013
2014
9/9
9/9
9/9
5/5
5/5
4/5
Risk Management Committee
As of 31 December 2014, the Risk Management Committee is composed of 4 members:
1. Mrs. Eng
2. Avm. Nathawat
3. Mr. Viroj
4. Mr. Tanapan
Mr. Apichat
Passakornnatee
Nimmolthanakorn
Supasoon
Khongnuntha
Sukachirawat
Chairman of Risk Management Committee
Risk Management Committee Member
Secretary to Risk Management Committee
Scope of Authority, Duty and Responsibility of Risk Management Committee
1. To formulate integrated risk management policies and framework which cover key risks such as
business risk and operational risk.
2. To assess potential risks from internal and external factors and their impact on the organization.
3. Monitor progress of the implementation of the Company’s risk management plan.
4. To inform the Audit Committee of key risks which have impact on internal controls.
5. To report risks and risk management measures to the Board.
6. To perform any other duties as assigned by the Board.
The Risk Management Committee held 4 meetings in 2013 and 4 meetings in 2014 and details of the meeting
attendance are as shown below:
Name - Surname
2. Avm. Nathawat Nimmolthanakorn
70
Risk Management Committee
2013
4/4
4/4
3/4
4/4
2014
4/4
4/4
4/4
3/4
ANNUAL REPORT 2014
Nomination and Remuneration Committee
As of 31 December 2014, the Nomination and Remuneration Committee is composed of 3 members:
1. Mr. Issarachai
2. Mr. Prasan
3. Mrs. Eng
Mr. Apichat
Decharit
Limpipatanakul
Passakornnatee
Sukachirawat
Chairman of Nomination and Remuneration Committee
Nomination and Remuneration Committee Member
Secretary to Nomination and Remuneration Committee
Remark: The 3 members of the Nomination and Remuneration Committee were appointed on 13 August 2014.
Scope of Authority, Duty and Responsibility of Nomination and Remuneration Committee
Nomination
1. To set criteria and policies for the nomination of members of the Company’s Board of Directors and
board committees in view of the structure, composition and member qualifications before proposing
thereof to the Board and/or the shareholders’ meeting as applicable for approval.
2. To screen and nominate candidates for directorships for vacancies from retirement and/or resignation
and/or new position.
3. To perform any other acts related to the nomination process as assigned by the Board.
4. To evaluate performance of CEO and propose the evaluation to the Board for approval.
Remuneration
1. To develop remuneration criteria and policies applicable to the Board of Directors and board committees
prior to proposal thereof the Board and/or the shareholders’ meeting as applicable for approval.
2. To determine financial and non-financial remuneration of individual members of the Board in view of their
scope of duties, responsibilities and performance, comparable industry benchmark and expected benefits
from such directors prior to proposal thereof through the Board to the shareholders’ meeting for approval.
3. To be responsible for the Board and provide clarification and response to questions related to directors’
remuneration at the shareholders’ meeting.
4. To disclose policies, principles/rationale supporting the proposed remuneration of directors and
executives in the annual filing form (Form 56-1) and the Company’s annual report.
5. To perform any other remuneration-related duties as assigned by the Board.
71
As of 31 December 2014, the Nomination and Remuneration Committee held 2 meetings and details of the
meeting attendance are as shown below:
Name - Surname
Nomination and Remuneration Committee
2014
2/2
2/2
2/2
Executive Committee
As of 31 December 2014, the Executive Committee of is composed of 5 members as follows:
1. Mr. Tan
2. Mrs. Eng
3. Mr. Preecha
4. Mr. Viroj
5. Mr. Tanapan
Mr. Apichat
Passakornnatee
Passakornnatee
Augcharanonda
Supasoon
Khongnuntha
Sukachirawat
Chairman
Member
Member
Member
Member
Secretary to Risk Management Committee
Scope of Authority, Duty and Responsibility of Executive Committee
1. The Executive Committee shall have the authority to execute policies of the Board under the laws and
the Company’s rules and regulations, except for matters which the laws stipulate as being subject to
the approval from the shareholders’ meeting.
2. To formulate and recommend to the Board the Company’s business policies, directions and strategies.
3. To propose business plans, managing authority, business plans and budget plans to the Board for
approval and execute the Company’s business plans and strategies in accordance with the policies
and business plans presented to the Board.
4. To execute the Company’s general affairs and determine the organizational and management structures
and the human resources management process, from recruitment to training, employment and
employment termination.
5. To approve the Company’s filing of credit or loan applications with banks including guarantee, payment
or disbursement transactions of the Company in its normal course of business such as investment and
payment of expenses. Each transaction shall be capped at Baht 200 million or its equivalent or at the
amount approved by the Board. Change to the said limit is subject to the Board’s approval.
72
6. To approve the opening of deposit accounts with banks and to specify payment amount authorizers of
the Company’s deposit accounts.
ANNUAL REPORT 2014
7. To approve the budget for salary increase or annual merit increase and bonus payment to employees,
except for CEO and above.
8. To approve the appointment and removal of the Company’s employees below CEO level.
9. To perform any other duties as assigned.
The delegation of authority and duty by the Executive Committee shall not explicitly or implicitly vest
the attorneys-in-fact appointed through power delegation or sub-delegation to approve transactions
involving conflict of interest between themselves or their related parties according to the definitions under
the notifications issued by the Capital Market Supervisory Board and/or the SET and/or other relevant
authorities) and Company or its subsidiaries and/or related companies. Such transactions are beyond the
scope of authority of the Executive Committee and must be approved by the Board or the shareholders’
meeting (as applicable), unless otherwise classified as transactions in normal course of business and on
an arm’s length basis according to the definitions determined by the Market Supervisory Board and/or the
SET and/or relevant authorities.
The Executive Committee held 6 meetings in 2013 and 12 meetings in 2014 and details of the meeting
attendance are as shown below:
Name - Surname
1. Mr. Tan Passakornnatee
3. Mr. Preecha Augcharanonda
Executive Committee
2013
6/6
6/6
6/6
6/6
6/6
2014
12/12
12/12
12/12
11/12
12/12
Chief Executive Officer
The Board Meeting No. 6/2013 dated 17 June 2013 resolved to appoint Mr. Tan Passakornnatee as Chief
Executive Officer with the scope of authority, duty and responsibility as detailed below:
Scope of Authority, Duty and Responsibility of Chief Executive Officer
1. To oversee business and/or routine operations of the Company.
2. To develop and propose policies, business plans, business strategies and annual budget plans of the
Company through the Executive Committee to the Board for approval.
3. To execute or manage operations in accordance with policies, plans and budgets approved by the
Board and/or the Executive Committee.
73
4. To regularly monitor and evaluate the Company’s performance and report the results and progress to
the Executive Committee, the Audit Committee and the Board.
5. To approve the Company’s filing of credit or loan applications with banks including guarantee, payment
or disbursement transactions of the Company in its normal course of business such as investment and
payment of expenses. Each transaction shall be capped at Baht 100 million or its equivalent or at the
amount approved by the Board. Change to the said limit is subject to the Board’s approval.
Transaction
Purchases and payments related to business administration
Asset purchase order and payment
Payment under contract
Asset amortization
Entertainment expense
Donation and promotional good expense
Limit
Up to Baht 50 million
6. To approve expenses related to the Company’s operations in its normal course of business such as
procurement deals whereas the limit of each transaction shall be according to the table of approval
authority approved by the Board and within the annual budget approved by the Board as well as to
execute agreements and contracts related to such deals.
7. To determine the organizational structure and approve the appointment, recruitment, job transfer,
remuneration, compensation, bonus and employment termination of employees at senior executive
vice president level and under.
8. To issue directives, regulations, announcements and statements necessary for the Company’s business
operations for compliance with the policies, the Company’s benefits and sound disciplines of the
Company.
9. To work with the head of internal audit team and the Audit Committee on supervision of business
operations and risk management of the Company in accordance with the Company’s objectives and
Articles of Association and the Corporate Governance Policy.
10. To appoint committees and working teams in order to support effective and transparent operation. CEO
may delegate to a person or persons the authority to perform acts under his supervision; or delegate
to such persons the authority within the scope as CEO deems appropriate. Such delegation may be
annulled or amended or re-assigned to other persons as CEO deems appropriate.
11. Perform any other duties as assigned by the Executive Committee or the Board.
The delegation of authority and duty by CEO shall not explicitly or implicitly vest the attorneys-in-fact
appointed through power delegation or sub-delegation to approve transactions involving conflict of interest
between themselves or their related parties according to the definitions under the notifications issued by
the Capital Market Supervisory Board and/or the SET and/or other relevant authorities) and Company or
its subsidiaries and/or related companies. Such transactions are beyond the scope of authority of CEO and
must be approved by the Board or the shareholders’ meeting (as applicable), unless otherwise classified
74
ANNUAL REPORT 2014
as transactions in normal course of business and on an arm’s length basis according to the definitions
determined by the Market Supervisory Board and/or the SET and/or relevant authorities.
Management Team
As of 31 December 2014, the Company’s management team is composed of 5 executives as follows:
1. Mr. Tan
2. Mrs. Eng
3. Mr. Preecha
4. Mr. Tanapan
5. Mr. Viroj
Passakornnatee
Passakornnatee
Augcharanonda
Khongnuntha
Supasoon
Chief Executive Officer
Executive Vice President – Accounting & Finance
Executive Vice President – Beverage Department
Executive Vice President – Factory Department
Directors and Executives’ Holdings of Securities
According to the Company’s policy, directors and executives shall report the changes in their holdings of
the Company’s securities to the Board by submitting Form 59-2 to Company Secretary who is responsible
for compiling and presenting such information to the Board meeting.
No.
1
2
3
4
5
6
7
8
9
Name
Mr. Chiu Yueh-Chin
Miss Araya Panichayanon
Mr. Viroj Supasoon
Avm. Nathawat Nimmolthanakorn
Mr. Prasan Limpipatanakul
Mr. Issarachai Decharit
Number of Shares
Number
of Shares
As of
31 Dec 13
As of
31 Dec 14
Increase
(Decrease)
180,000,000
120,000,000
64,842,000
20,926,600
7,300,000
6,700,000
-
180,000,000
120,000,000
59,858,000
20,926,600
7,300,000
6,670,000
-
Remark
(4,984,000)
(30,000)
-
Report on Holdings of Securities by Retiring and Resigning Director in 2013 and 2014
No.
1
Name
Number of Shares
As of
31 Dec 13
2,000,000
Number
of Shares
Increase
As of
31 Dec 14
(Decrease)
1,500,000
(500,000)
Remark
75
Company Secretary
The Company has appointed Mr. Apichat Sukajirawat, First Senior Vice President, Accounting & Finance,
as Company Secretary, effective from 18 February 2013, to perform company secretariat functions in
accordance with the Securities and Exchange Act (No.4) B.E. 2551. The Board has supported and encouraged
Company Secretary to continuously develop his knowledge and abilities pertaining to laws, accounting
and company secretariat function through training courses and seminars. Profile of Company Secretary
is as detailed below:
Name-Surname
Position
Age
Nationality
Education/ Training
:
:
:
:
:
:
Shareholding (%)
Family relationship with Executive
:
:
Mr. Apichat Sukachirawat
Company Secretary
49 years
Thai
Bachelor of Accounting, Ramkhamhaeng University
DAP 106/2013, Thai Institute of Directors Association
Company Secretary Program, Class 30
0.45
None
Work experience :
Year
2011 - Present
2002 - 2011
1998 - 2002
1995 - 1998
1994 - 1995
Position
Vice President, Accounting & Finance
Vice President, Accounting Department
Accounting Manager
Accounting Manager
Accountant
Company
Ichitan Group Pcl.
Oishi Group Pcl.
Wedding Business Consultant Co., Ltd.
BKK(1985) Pcl.
Thai-Denmark Swine Breeder Pcl.
Duty and Responsibility of Company Secretary
Company Secretary must perform duties as stipulated in Section 89/15 and Section 89/16 of the Securities
and Exchange Act (No. 4) B.E. 2551 which has come into force since 31 August 2008 and demonstrate
responsibility, due care, honesty and compliance with the laws, the Company’s objectives and Articles of
Association, and the resolutions of the Board and the shareholders’ meetings. Statutory duties of Company
Secretary are as follows:
1. Prepare and retain the following documents:
• Register of directors
• Invitation to Board meetings, minutes of Board meetings and annual reports of the Company.
• Invitation to shareholders’ meetings and minutes of shareholders’ meetings.
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ANNUAL REPORT 2014
2. Retain reports on conflicts of interest of directors or executives
• Directors and executives have the duty to “report their conflicts of interest”. (It means that
directors and executives have the duty to report the conflicts of interest of themselves and their
related parties to the Company.)
• Company Secretary shall submit a copy of such report to the Chairman of the Board and the
Chairman of the Audit Committee within 7 days from the receipt thereof.
• There must be an effective filing system to ensure that all relevant documents and evidence
are retained properly and completely and are available for verification for at least 5 years from
the date such documents and information are prepared.
3. To perform any other duties according to the notifications of the Capital Market Supervisory Board.
Remuneration of Director and Executive
The remuneration of directors and executives has been clearly and transparently determined and are
commensurate with their scope of duties and responsibilities. In addition, the remuneration has been
properly reviewed based on considerations such as the Company’ best interest. Remuneration of directors
and executives in 2012 – 2014 are as detailed below:
Remuneration of Board of Directors
It is the Company’s policy not to offer remunerations for service as Board members to executive directors
– directors being on the Company’s management team or the Company’s employees. Only non-executive
directors are entitled to remunerations, in the form of monthly salary and attendance fee, which were
approved by the Board Meeting No. 1/2014 dated 7 March 2014 as detailed below:
Position
Monthly Salary (THB)
Attendance Fee
(THB/Meeting)
Board member
45,000
35,000
-
Remuneration of Audit Committee
The Board Meetings No.1/2014 dated 7 March 2014 approved the remunerations of the Audit Committees
in the form of monthly salary and attendance fee as detailed below:
Position
Chairman of the Audit Committee
Audit Committee member
45,000
35,000
Attendance Fee
(THB/Meeting)
-
77
Remuneration of Audit Committee in 2013 – 2014
Name – Surname
Position
Total
Chairman
Member
Member
Monthly Salary and
Attendance Fee (THB)
2013
540,000
420,000
420,000
1,380,000
2014
540,000
420,000
420,000
1,380,000
Remuneration of Executive Committee
Members of the Executive Committee are not entitled to remunerations for their positions on the Executive
Committee as they are the Company’s executives.
Remuneration of Risk Management Committee
It is the Company’s policy to offer remunerations for service as Risk Management Committee members
only to those who are not on the Company’s management team or are the Company’s employees. The
Board Meeting No. 1/2014 dated 7 March 2014 approved the remunerations of the Board committees,
in the form of monthly salary and attendance fee, as detailed below:
Position
Chairman of each Board committee
Member of each Board committee
Attendance Fee
(THB/Meeting)
-
15,000
15,000
Remuneration of Risk Management Committee in 2013 – 2014
Name – Surname
Position
Chairman
Member
Member
Member
Monthly Salary and
Attendance Fee (THB)
2013
2014
30,000
-
60,000
-
Remark:
In 2013, the Risk Management Committee held 4 meetings and the remunerations shown in the above table are for 2 meetings which were held
after the remunerations were approved by the Board Meeting No. 6/2013 dated 17 June 2013.
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ANNUAL REPORT 2014
Remuneration of Nomination and Remuneration Committee
According to the Company’s policy, remuneration for the Nomination and Remuneration Committee
shall be paid only to members who are not the Company’s executives or employees. Monthly salary and
attendance fee of the Nomination and Remuneration Committee are within the remuneration framework
for Board committees as approved by the Board Meeting No. 1/2014 dated 7 March 2014, details of which
are as shown below:
Position
Attendance Fee
(THB/Meeting)
Chairman of each Board committee
Member of each Board committee
-
15,000
15,000
Remuneration of Nomination and Remuneration Committee in 2014
Name - Surname
Position
Monthly Salary and Attendance Fee
(THB)
2557
30,000
30,000
-
Chairman
Member
Member
Remark:
In 2014, the Nomination and Remuneration Committee held 2 meetings.
Remuneration of Executive
The remunerations in the form of monthly salary, bonus and other compensations paid by the Company
to its executives in 2013 – 2014 are as follows:
Remuneration of the Company’s Executive in 2013 – 2014
Type
Salary
Bonus
Total
2013
No. of
Executive
5
5
2014
Amount
(THB)
20,988,000
2,247,000
23,235,000
No. of
Executive
6
6
Amount
(THB)
22,767,040
6,041,760
28,808,800
Remark:
In 2013, Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee waived their right to the remunerations. Thus, the figures shown above represent
the bonus of 3 executives.
79
Other Remuneration
In 2013 – 2014, the provident fund contributions paid by the Company for its executives are as detailed below:
2013
Type
Contribution to provident fund
Total
No. of
Executives
5
2014
Amount
No. of
Executives
(THB)
942,600
6
942,600
Amount
(THB)
1,032,352
1,032,352
Personnel
Recognizing that personnel is a valuable resource, the Company attaches importance to human resources
management and continuous people development to ensure that its personnel is highly capable and
knowledgeable as human resources is a key driver of the Company’s competitiveness.
Manpower
As of 31 December of 2013 - 2014, the numbers of the Company’s employees were 211 and 275, respectively.
Manpower in 2013 – 2014 by Department
Department
1. Office of CEO
2. Accounting & Finance
3. Beverage Marketing
4. Production Plant
5. Design
6. Marketing Communications
7. Online Marketing
8. Human Resources
9. Business Development
10. Procurement
11. Legal
12. Internal Audit
Total
80
Manpower
31 Dec 13
14
12
19
125
6
3
5
8
3
13
2
1
211
31 Dec 14
12
12
30
181
6
3
5
9
2
11
2
2
275
ANNUAL REPORT 2014
Significant Change in Number of Employee in Previous 3 Years
In 2014, the Company increased its manpower in certain departments such as production plants and
beverage marketing to support our production capacity expansion.
Remuneration of Employee
The Company offered to its employees the remuneration in the form of salary, bonus, provident fund
contribution, group insurance, overtime pay and other types of compensation. Remunerations paid to
employees (exclusive of executives) in 2013 – 2014 are as detailed below:
Remuneration (THB)
2013
Salary
Bonus
Other remunerations*
Total
67,092,573
15,214,014
48,419,902
130,726,489
2014
84,707,846
19,773,120
50,658,917
155,139,883
Remark: *Other remunerations refer to the contributions to provident fund and social security fund, vehicle allowance, telephone allowance, labor
costs, overtime pay, employee welfare and benefits, and share-based payment etc.
Major Labor Dispute in Previous 3 Years
The Company has no labor dispute with its executives or employees with respect to right infringement or
employment contract violation.
People Development Policy
The Company is fully aware of the importance of people development to the enhancement of organizational
effectiveness and efficiency, including competitive advantages and sustainable growth and achievements.
Therefore, the Company has consistently encouraged its employees to sharpen their skills, expand their
knowledge and internalize the deep sense of social responsibility through the following:
• To promote the career advancement of our employees, the Company has developed career growth
roadmap to communicate to employees their promotion and job transfer opportunities, including the
skills and competencies required for such positions. Also, criteria for promotion/job transfer have been
clearly defined.
• Our training and people development programs primarily evolve around training plans which have
been customized to the development needs in terms of competencies, attitude and functional skills.
Development and training have been conducted through in-house and external programs and regularly
offered to employees at all levels across the organization to ensure that our employees are equipped
with knowledge and competencies required for their effective performance.
81
Corporate Governance
Corporate Governance Policy
Ichitan Group Public Company Limited is committed to the principles of corporate governance and the
continuous enhancement of its corporate governance system to achieve business excellence and operational
effectiveness for the best benefits of our shareholders and stakeholders. The Company has consistently
adhered to the principles of integrity, business ethics, transparency and disclosure and translated such
principles into its Corporate Governance Policy which is based on the SET’s guidelines. The policy is
enforced on and complied with by all directors, executives and employees of the Company.
Corporate Governance Goal
The Board has attached importance to the corporate governance principles and aimed to ensure the
Company’s proper compliance with the laws and applicable rules, practices and requirements to achieve
transparency and fairness in all dimension of the Company’s business operations. The Board has also
given priority to the Company audit, internal control, risk management and disclosure which to foster
continuous and sustainable growth of the Company and generate the maximum value and return to all
shareholders and stakeholders within the scope permissible by the law and business codes of conducts.
In addition, the Company has actively promoted the awareness of the corporate governance principles and
policy and the adherence thereto through the Corporate Governance Handbook and the Code of Conduct of
the Company which are available on the Company’s website in Thai and English to facilitate easy access
thereto by all employees, shareholders, investors, stakeholders and relevant parties.
The corporate governance practices of the Company can be divided into 5 parts as follows:
Part 1 Rights of Shareholders
Part 2 Equitable Treatment of Shareholders
Part 3 Roles of Stakeholders
Part 4 Disclosure and Transparency
Part 5 Responsibilities of the Board
Part 1 Rights of Shareholders
The Company recognizes the importance and rights of shareholders and encourages shareholders to
exercise their rights. Policies and guidelines of the Company in respect of the promotion of shareholders’
right are as detailed below:
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ANNUAL REPORT 2014
1. The Company provides shareholders with information in respect of the date, time, venue, agenda
items and all supporting documents in advance of shareholders’ meetings. Shareholders are notified
of meeting and voting procedures which are published on the Company’s website to allow them
sufficient time to study the meeting documents before the documents containing such information
are delivered to them.
2. The Company does not perform any act that could hinder shareholders from studying the Company’s
information.
3. The Board facilitates shareholder participation and voting at meetings.
4. The chairman of the meeting allocates adequate time for discussion and encourages shareholders to
express their opinions and ask questions related to the Company. Shareholders are offered opportunities
to submit their questions to the Company prior to the meeting date.
5. All directors attend shareholders’ meetings and shareholders can raise questions directly to the
chairpersons of the committees responsible for any specific issues.
Investor Relations Division of the Company is in charge of releasing the Company’s information to
shareholders, investors, analysts, the press and the general public and ensuring that the disclosures are
accurate, complete, timely, transparent and fair to all audiences. Information disclosed includes, for example,
the Company’s information, financial statements, annual report, notice of shareholders’ meeting, SET filings
and news about the Company’s securities. Such information is available in Thai and English under the
section of “Investor Relations” on the Company’s website at www.ichitangroup.com. Shareholders may
directly contact Investor Relations Division via e-mail at [email protected] or www.ichitangroup.com.
Part 2 Equitable Treatment of Shareholders
The Company offers equal opportunity to all shareholders and has a policy on equitable treatment of
shareholders as follows:
1. The Board facilitates the minority shareholders’ proposal of meeting agenda in advance of the
shareholders’ meeting date.
2. The Board has set clear criteria for deciding whether agenda items proposed by minority shareholders
should be included on the meeting agenda.
3. Unless necessary, the Board refrains from adding extra items to the meeting agenda without advance
notification thereof, especially important matters which require substantial time for studying by
shareholders,.
4. The Board establishes procedures for the nomination of directors by minority shareholders.
5. The Board encourages shareholders to use proxy form on which they can specifically indicate their
votes and to appoint at least 1 independent director as their proxy.
83
6. The Board encourages shareholders to use voting ballots for important agenda items to promote
transparency and verification.
7. The Board allows shareholders to appoint directors on an individual basis.
8. The Board establishes guidelines for information retention and protection and the Insider Trading
Policy in writing for enterprise-wide compliance. All directors and executives are required to report
their shareholdings to the Board in accordance with applicable laws.
In 2014, the Company held 1 shareholders’ meeting, i.e. the annual general meeting of shareholders (AGM)
no. 1/2014 on 31 March 2014. In this regard, the notice of the AGM containing the agenda, the Board’s
recommendations, the minutes of the previous meeting, accompanying documents, proxy form and proxy
appointment instruction had been submitted at least 7 days prior to the meeting to all shareholders whose
name appeared on the register as of the closing date. The notice had been published in at least one daily
newspaper for at least 3 consecutive days. Shareholders were offered the opportunity to appoint independent
directors or any other persons as their proxy.
In the 2014 AGM, all of the 9 directors of the Company attended the meeting and the chairman of the
Board presided over as the chairman of the AGM. Details regarding the quorum, voting and vote counting
procedures, and instruction on use of ballots were notified to the AGM. The voting results were transparently
disclosed. Shareholders were allowed sufficient opportunities and time to raise questions and offer opinions,
and received satisfactory and clear responses and clarification from directors and executives. The meeting
proceeded in full compliance with the laws and registration could be made before the meeting began until
it was adjourned. The minutes of the meeting were accurately and completely recorded and systematically
retained for the ease of reference and verification.
Part 3 Roles of Stakeholders
The Company is committed to equitable treatment of external and internal stakeholders and justly protect
the interest of all stakeholders in accordance with the laws and its policy on stakeholder treatment.
The Audit Committee of the Company is an independent entity in charge of oversight the Company’s
compliance thereof.
The Company’s guidelines on the rights of stakeholders are as follows:
• Customers: We aim to deliver the maximum value and satisfaction to all groups of customers by
offering the best and quality products.
• Shareholders: The Company strives to continuously achieve solid growth and strong business
momentum through efficient and transparent business operations in order to generate suitable and fair
returns for shareholders and increase the Company’s value. The Company has implemented effective
internal control, internal audit and risk management systems and equitably treated all shareholders.
Disclosures have been made in a timely, complete and accurate manner.
• Employees: The Company has continuously developed its human resources and offered career
advancement opportunities to employees. All employees receive equitable treatment and suitable and
fair remuneration which is commensurate with their knowledge, abilities and performance.
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ANNUAL REPORT 2014
• Suppliers and creditors: The Company aims to establish trust, cooperation and positive relationship
with its suppliers and creditors though its compliance with agreed terms and conditions and legal and
regulatory requirements for the mutual benefits of all parties concerned.
• Partners and competitors: The Company treats all partners and competitors with fairness and adheres
to the laws and rules governing confidentiality as well as fair competition best practices. The Company
does not use dishonest or unethical means to gain information about its partners and competitors
• Community, society and environment: The Company is responsible for the society and the environment
and sensitive to issues which might affect the community, society and environment. The Company cares
about environmental protection, operates in accordance with business ethics and supports activities
that contribute to the society. Additionally, the Company fosters the environmental awareness and a
sense of social responsibility among its employees.
The Company will continue to comply with applicable legal and regulatory requirements in order to promote
and protect the stakeholders’ rights.
Part 4 Disclosure and Transparency
The Company fully and accurately releases its financial and non-financial information in accordance with
applicable disclosure rules of the SEC and the SET as follows:
1. The Company discloses information in accordance with applicable requirements through the SET,
annual filing (Form 56-1) and annual report. Information about the Company in Thai and English is also
available through the Company’s website.
2. The Board discloses the approved Corporate Governance Policy in brief and the results of the
implementation thereof through the Company’s annual report and website.
3. The Company is responsible for the consolidated financial statements of the Company and its subsidiaries
including financial information disclosed in the annual report.
4. The Company publishes the scope of roles and responsibilities of the Board and committees, the
number of meetings held, the meeting attendance report, and opinions on their performance in its
annual filing form (Form 56-1).
5. The Company discloses in the annual filing form (Form 56-1) the remuneration of directors and executives
which are commensurate with their scope of duties and responsibilities.
Investor Relations
Investor Relations Division of the Company is in charge of releasing the Company’s information to
shareholders, investors, analysts, the press and the general public and ensuring that such disclosure is
fair and equitable to all parties.
Ichitan has attached importance to the disclosure of the Company’s information through IR activities in
which the management team also participates to promote correct understanding about the Company’s
operations and management direction as well as positive relationship and exchange of beneficial opinions
and ideas.
85
The Company’s IR activities in 2014 include 3 analyst meetings, regular company visit programs and
correspondence with investors and the press via e-mail and telephone.
Information about the Company, its performance, financial statements, news, securities information, and
annual report etc. is regularly updated and available from the Company’s website under the section of
Investor Relations. Investors can directly contact Investor Relations via telephone at 02-716-5555 or via
e-mail at [email protected].
Part 5 Responsibilities of the Board
1. Board Composition
• The Board is comprised of 9 directors, of which 6 are executive directors and 3 are non-executive
directors, and their term of position is 3 year. The 3 non-executive directors qualify as independent
directors in accordance with the SEC’s qualification criteria. The number of the Company’s
independent directors meets the SEC’s requirements which stipulate that, among other, listed
companies must have independent directors at least one-third of their total directors. The Company’s
directors possess expertise and knowledge in different fields such as business administration,
accounting and finance which are considered beneficial and relevant to the Company’s business.
• The Company has 4 board committees, i.e. the Audit Committee, the Executive Committee,
the Risk Management Committee and the Nomination and Remuneration Committee.
• The Chairman of the Board also serves as the Chief Executive Officer of the Company. In this regard,
the Company has clearly defined the scope of authority, duty and responsibility to promote the
checks and balances.
• The Company has delegated to the Company Secretary the duty to provide advice and consultation
regarding legal and regulatory requirements applicable to the Board as well as to ensure that
the Board’s resolutions are duly implemented.
2. Board Committees
• The Board decentralizes its authority to promote efficient and transparent management.
The Audit Committee is delegated by the Board to review compliance of the Company with corporate
governance principles whereas the Risk Management Committee is responsible for review and
screen specific matters to support decision-making by CEO.
• The Chairman of the Audit Committee must be an independent director to promote the transparency
and independence.
3. Roles and Responsibilities of the Board
The Board is comprised of members who possess suitable qualifications in terms of their leadership,
knowledge, skills and expertise in various fields. Roles and responsibilities of the Board are as follows:
• To determine the vision, mission, strategies, and annual business and budget plans of the Company,
including to meet regularly to oversee and monitor the management in implementing the business
plan efficiently and effectively.
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ANNUAL REPORT 2014
• To formulate written policies pertaining to good corporate governance, professional and business
ethics, codes of conduct for directors, executives and employees for internal implementation.
• To set guidelines and policies governing transactions with potential conflicts of interest in order to
protect the interest of the Company and its shareholders. In this regard, the Board and the Audit
committee have established relevant operating and disclosure procedures.
• To set financial policies which contribute to effective controls and compliance.
• To formulate enterprise-wide Risk Management Policy and regularly inform the management of
relevant updates.
Corporate Governance Policy
The Company has in place the written Corporate Governance Policy which has been approved by
the Board. The policy has been regularly reviewed and consistently implemented across the organization.
Following the SET-listing of Ichitan securities, the Company has additionally complied with all rules and
regulations stipulated by the SEC and the SET. The corporate governance report is part of the annual
report and annual filing (Form 56-1).
Business Code of Conduct
The Company has determined codes of conduct for directors, executives and employees to promote
integrity and fairness, including proper treatment of all stakeholders, the public and the society.
The codes of conduct have been communicated across the organization and conformity thereto has
been continuously monitored.
Conflicts of Interest
The Company’s policy on conflicts of interest is based on the principle that all transactions shall be
only for the Company’s best interest and acts potentially causing conflicts of interest shall be avoided.
Parties related to or involving in such transactions shall report to the Company their relationship or
connection with respect to such transactions and shall not participate in the consideration or approval
process of such transactions.
Connected transactions and conflicts of interest shall be carefully reviewed by the Audit Committee in
accordance with the requirements and rules stipulated by the SEC and the SET before proposal there
of to the Board as well as disclosed in the annual report and the annual filing (Form 56-1).
Internal Control System
The Company has recognized the importance of the internal control system at operational and managerial
levels as a key contributor to business excellence. Therefore, the Company has clearly determined the
authority and duties of operating officers and executives in writing to support effective asset utilization
and control, segregation of duties of operating officers, supervisors and controllers. Also, the Audit
Committee is tasked with the review of the Company’s internal control and internal audit systems to
ensure appropriateness and effectiveness of the systems. Independent experts have been engaged in
the monitoring and review of our internal control system and report the results to the Audit Committee
to ensure that core activities of the Company are in line with relevant guidelines and effective.
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Risk Management
The Company has reviewed the adequacy of its internal control system in order to identify areas for
improvement and further enhance the effectiveness of its operations.
Reporting
The Audit Committee is in charge of reviewing financial statements which had been proposed and
reviewed by the Accounting Department and the auditors on a quarterly basis. The Board is responsible
for the Company’s financial statements and financial information (report on the Board of Directors’
responsibility for financial reporting) disclosed in the annual report. The Company’s financial statements
have been prepared in accordance with the accounting standards and certified/reviewed by the
Company’s auditors. Important information, financial information and non-financial information are
regularly and completely disclosed and based on actual facts.
Succession Plan
The Board recognizes that the efficiency, effectiveness and continuity of business are vital to the
sustainable growth of the organization. Therefore, in 2014 the Company first initiated the succession
planning to the Company has successors for its key positions.
4. Board Meetings
• The Company regularly holds Board meetings at least once every 3 months and special meetings
of the Board will be held as and when necessary. All directors attach importance to the Board
meetings and attended every meeting. The invitation to Board meetings together with meeting
agenda are submitted to directors at least 7 days prior to each meeting to allow directors sufficient
time to study the materials.
• Directors can freely and openly express their opinions and ideas at Board meetings and the minutes
of the meetings are duly recorded in writing. Meeting minutes which have been adopted by the
Board are properly retained and available for verification by directors and related parties. Senior
executives have been invited to attend Board meetings to provide information and opinions on
matters discussed by the Board.
• The Chairman of the Board is responsible for determining the meeting agenda and all directors
are vested with the authority to independently propose agenda items as they deem appropriate.
• Senior executives also participate in Board meetings.
5. Remuneration
The Company has appointed the Nomination and Remuneration Committee which is responsible for offering
to the Board its opinions on the remuneration of each committee which shall be in accordance with the
Director Remuneration Policy of the Company. Remuneration of directors has been transparently and
clearly determined based on the Company’s operating results and are commensurate with the scope of
duties and responsibilities of each director. The Company aims to offer appropriate remuneration scheme
to effectively retain competent directors for the Company’s best interest. The director remuneration is
subject to approval from the annual general meeting of shareholders.
Remuneration of directors and executives is disclosed based on the template of the SEC.
6. Director and Executive Development
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The Board encourages all directors and executives to regularly attend training courses and seminars to
enhance their knowledge in all related fields, develop their job-related competencies and strengthen their
corporate governance repertoire.
ANNUAL REPORT 2014
7. Self-Evaluation of the Board
The Board has a policy to adopt self-assessment for the performance of the Board and individual directors.
Nomination of Director and Executive
In the process of director nomination, the Nomination and Remuneration Committee takes into consideration
the qualifications of candidates in terms of their education, knowledge, abilities work experience as well
as the applicable legal and regulatory requirements. The nominations are proposed to the Board and/or
the shareholders’ meeting for consideration and approval in accordance with the Company’s policy.
Director
The nomination of directors shall be in accordance with the Company’s Articles of Association and the
nominated candidates shall possess all qualifications required under the Public Limited Companies Act
B.E. 2535, the Securities and Exchange Act and the notifications of the SEC, the Market Supervisory Board
and/or other relevant regulations. According to the Company’s Articles of Association, the Board shall be
comprised of at least 5 members and not less than half of the total Board members shall have domicile
in Thailand. The Board shall elect the Chairman of the Board and, where appropriate, the Vice Chairman
of the Board. Directors shall be elected at the shareholders’ meeting according to the majority and the
following procedures:
1. Each share shall represent one vote.
2. ach shareholder shall cast all the votes he/she has to elect one or several directors and may not split
the votes for multiple candidates.
3. The candidates who receive the highest votes will assume directorship according to vacant seats
applicable to a particular election. In case of vote tie, the Chairman shall have the casting vote.
At each annual general meeting of shareholders, one-third of the directors, or the closet thereof if the
number cannot be evenly divided, shall retire by rotation. Retiring directors may be re-elected. It shall be
deemed that directors vacate their seat upon their death, resignation, disqualification, or possession of
prohibited characteristics under the Public Limited Companies Act, or removal according to the resolution
of the shareholders’ meeting or the court’s order. As such, the Board may appoint persons who possess
suitable qualifications and no prohibited characteristics under the Public Limited Companies Act to fill the
vacated seat in the subsequent Board meeting, unless the remaining term of such directors is less than
2 months. The office terms of a new director appointed in replacement for another director shall be equal
to the remaining office term of the directors whom he/she replaces and such director appointment by the
Board shall require a three-fourths majority of the remaining directors.
Directors are prohibited by the Company from operating a business of the same nature as and in competition
with the Company, or to enter to be a partner in an ordinary partnership or a partner of limited liability in a
limited partnership or a director of a private company or other company which operates a business of the
same nature as and in competition with the Company, whether for their own or others’ benefit, unless the
meeting of shareholders had been notified prior to their appointment as director of the Company. Directors
shall notify the Company without delay of their direct or indirect interest in any contracts of the Company
or changes to their holding of shares or debentures issued by the Company or its affiliates.
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The Board shall select independent directors in accordance with the qualification criteria under the Public
Limited Companies Act B.E. 2535, the Securities and Exchange Act, the notifications of the SEC and the
Market Supervisory Board, and any other applicable notifications and/or rules and regulations. The Company
shall have at least 3 independent directors or one-third of its directors, whichever is higher.
Qualifications of Independent Director
Independent directors shall not have business with the Company or involve in the management of the
Company or have any interest related to the Company in a way that may affect the independence of their
decisions. Independent directors must possess the following qualifications:
1. An independent director and his/her related parties shall altogether hold not more than 1% of the total
shares with voting right of the Company, its parent company, subsidiaries, affiliates, major shareholders
or persons having controlling power over the Company.
2. An independent director must not be and have been executive director, employee, salaried consultant
or the Company, its parent company, subsidiaries, affiliates, sister companies, major shareholders or
persons having controlling power over the Company unless he/she has ended such status for 2 years
or longer from the date of filing permission with the SEC. The above prohibited characteristics exclude
the independent director’s status as a civil servant or consultant of a government entity which is the
major shareholder or person having controlling power over the Company.
3. An independent director must not have blood relationship or relationship through legal registration as
a father, mother, spouse, sibling, and child, including as a spouse of a child, of any director, executive,
major shareholder, person with controlling power, or person nominated as director, executive or person
with controlling power of the Company or its subsidiaries.
4. An independent director must not have or have had any business relationship with the Company,
its subsidiaries, affiliates, major shareholder, or person with controlling power of the Company in a
manner that may hinder his/her independent judgment. An independent director must not have or
have had been a significant shareholder or a person with controlling power of an entity which has
business relationship with the Company, its parent company, subsidiary, affiliate, major shareholder,
or person with controlling power, unless he/she has ended such status for 2 years or longer from the
date of filing permission with the SEC.
Business relationship stated above refers to any commercial transactions in the normal course of
business, real property leasing, transactions related to assets or services, lending or borrowing,
guarantee, collateralization or any other similar acts which cause the Company or its counterparty
to have debt obligations to the other party in the amount of 3% of the Company’s net tangible assets
or Baht 20 million and above, whichever is lower. The calculation of such debt obligations shall be
according to the calculation method for connected transactions under the notifications of the Capital
Market Supervisory Board on the criteria for connected transactions mutatis mutandis and shall also
cover the period of 1 year prior to such business relationship.
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5. An independent director must not be or have been an auditor of the Company or its parent company,
subsidiary, affiliate, major shareholder or person with controlling power of the Company; or a significant
shareholder or a person with controlling power or a partner of an auditing firm which provides auditing
service for has the Company, its parent company, subsidiary, affiliate, major shareholder, or person
ANNUAL REPORT 2014
with controlling power, unless he/she has ended such status for 2 years or longer from the date of
filing permission with the SEC.
6. An independent director must not be or have been a professional service provider, including legal or
financial advisor who obtains fee of more than Baht 2 million per year from the Company, its parent
company, subsidiary, affiliate, major shareholder, person with controlling power of the Company;
or significant shareholder or person with controlling power or a partner of such professional service
provider, unless he/she has ended such status for 2 years or longer from the date of filing permission
with the SEC.
7. An independent director shall not be a representative of the Company’s directors, major shareholder
or shareholder being related party of the Company’s major shareholder.
8. An independent director shall not operate business of the same nature as and in competition with
the Company or its subsidiary; shall not be significant partner of partnership, or executive director,
employee, officer or salaried consultant or holder of more than 1% of the shares with voting rights of
business of the same nature as and in competition with the Company or its subsidiary.
9. An independent director shall not possess any other characteristics which can obstruct his/her
independent judgment of the Company’s business operations.
An independent director may be assigned by the Board to make collective decisions related to business
operations of the Company, its parent company, subsidiary, affiliate, sister company, major shareholder
or person with controlling power of the Company.
If a person appointed as an independent director has or had business relationship or is or was a professional
service provider which resulted in the transactions worth more than the amount specified in 4) or 6) above,
the Board may grant relaxation for such appointment provided that it does not affect his/her independence
and the following information has been disclosed in the notice of shareholders’ meeting under the agenda
item of independent director appointment:
1. Nature of business relationship or professional service which cause the deviation from the qualification
requirements.
2. Rationale and necessity for the appointment or retention of such person as the Company’s independent
director.
3. The Board’s opinion on the nomination of such person as an independent director.
Executive
The nomination and selection policies and criteria for the position of CEO are determined by the Board
whereas the same for senior executive vice president and executive at vice president level and above are
determined by CEO.
Control over Use of Insider Information
To promote the Company’s good governance system, the Board has approved the Insider Information
Policy as follows:
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1. Directors, executives, employees and staff of the Company shall protect confidential information and/
or inside information of the Company.
2. Directors, executives, employees and staff of the Company shall not disclose confidential information
and/or insider information of the Company for their personal gain or interest of others either directly
or indirectly, regardless of whether they receive compensation for such disclosure.
3. Directors, executives, employees and staff of the Company, including their spouse and dependent
children shall not use insider information of the Company for the benefit of securities trading, securities
transfer transactions or legal acts which may cause damage the Company either directly or indirectly.
Violation of this rule is considered a grave offence.
4. The Company has established guidelines for retention of insider information and prevention against use
of insider information to prohibit directors, executives at vice president level and above, and employees
having access to insider information, including their related parties from trading the Company’s
securities during the period of 1 month prior to the release of quarterly and annual financial statements
and 48 hours following the release of important information.
5. Directors and executives at vice president level and above shall report to the Company all of their
trading transactions of the Company’s securities.
Policy and Guideline on Use of Insider Information by Executive
The Company has established the Insider Information Policy to prevent and prohibit the use of insider
information, especially the Company’s non-public financial information, by limiting the number of employees
having access to such information. The Company has also communicated to all executives their duties in
this respect which include the obligation to report to the Company the holding of the Company’s securities
by themselves, including their spouse and dependent children, and applicable punitive measures in
accordance with the Securities and Exchange Act B.E. 2535 and its amendments. In addition, executives
of the Company are required to report changes to their holding to the Company’s securities to the SEC in
accordance with Section 59 of the Securities and Exchange Act as well as to strictly comply with Section
24 of the Securities and Exchange Act.
Audit Fee
• Audit Fee
The Company paid the audit fee worth Baht 1,740,000 to KPMG Phoomchai Audit Limited in 2014.
• Out-of-Pocket Expense
The out-of-pocket expense amounted to Baht 80,000.
Compliance with Corporate Governance Principle
The Board, executives and employees of Ichitan Group Public Company Limited have duly complied
with the corporate governance principle and continuously monitored compliance thereof. In 2014, no
non-compliance was identified.
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Corporate Social Responsibility
Ichitan Group Public Company Limited (“the Company”) strives to maximize the satisfaction of our customers,
buyers and end-consumers. In addition to offering products of premium quality and fair prices, the Company
aspires to positively contribute to the society and the environment and strictly refrains from acts which
appear to be the infringement of the consumer rights. To attain the aforesaid goals, the Company has
strictly adheres to our Corporate Social Responsibility Policy which encompasses the following pillars:
Fairness and Integrity
Fair Competition
The Company has operated on the principle of fairness and complied with competition-related laws and
regulations. The culture of integrity and fairness has been embedded in our corporate culture and the
anti-unfair competition measures have been integrated with the Company’s rules and regulations which
are enforced enterprise-wide to promote transparency and disclosure. Our corporate social responsibility
(CSR) extends to cover responsible political participation, compliance with the laws, fair competition,
promotion of CSR awareness among business units and honoring commitments agreed with our suppliers
and creditors. These topics have been detailed in the Company’s code of business conduct which ultimately
aims to foster the fairness and integrity in the relationship between the Company and its customers and
partners, which include suppliers, farmers and the local community, which are the foundation for mutual
trust and sustainable future of all parties concerned.
To promote fairness, integrity and transparency in our business practices, the Company has developed
our internal guidelines which cover the following:
• Clearly indicate mutually agreed terms and conditions in purchase and sale agreements and strictly
comply with such terms and conditions. Where issues which might cause the Company to be unable
to comply with the agreed terms and conditions arise, customers must be notified and consulted
immediately to solve such issues.
• Provide customers with correct and sufficient product information in a timely manner.
• Deliver quality products that meet the promises given to customers at fair price without price gouging.
Promotion of CSR Network Among Our Business Partners
• Scrutinize the relationship between employees at all levels with suppliers, subcontractors and
contractors of the Company regularly to prevent unfair or inequitable treatment.
• Promote fair employment practices among the Company’s suppliers, subcontractors and contractors
through communication, cooperation and examination.
• Incorporate CSR practices, with particular attention to the society and the environment, in our
procurement policy and procedures.
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• Encourage alliances/business partners to adopt similar practices without instigating unfair competition.
• Encourage business partners to undertake CSR activities and engage them in our CSR activities.
• Promote CSR activities of suppliers and continuously engage them in our CSR activities directly as
volunteers in projects and indirectly through in-cash or in-kind donations.
Respect for Property Rights
Ichitan Group Public Company Limited has advocated for and demonstrated the respect for property right,
intellectual property right, copyright, patent and moral right. It is the Company’s policy to comply with laws
governing the protection of intellectual property right and copyright. We are well aware that intellectual
property is one of the most valuable assets and vital for the Company’s ability to gain competitive edge.
Brand identity consists of the Company’s name, logo, copyright, patent, trademark, service mark, trade
secret, work process, innovation, and other legal rights. The Company must protect the aforesaid properties
of itself and mutually respect the same of others in all aspects of its business operations, including
the use of computers, the Internet and information.
To ensure our proper compliance with the laws, rules and contractual obligations related to intellectual
property right, patent, copyright, trade secret and proprietary information, the Company has established
the following guidelines:
• The Company shall not infringe or abuse intellectual property rights.
• It is the duty of employees at all levels of the Company to strictly protect the confidentiality of
trade secrets, secret formulas, production processes or confidential business practices and prevent
the leakage thereof.
• Employees at all levels of the Company shall demonstrate due respect for intellectual property rights
of others and shall not use contents that are protected by intellectual property rights, in whole or in
part, without prior permission or compensation payment to the owners.
• Works created in the course of employment shall be regarded the Company’s intellectual properties.
• Upon employment termination, intellectual properties in all forms, including the works of invention,
shall be handed over and returned to the Company.
• The Company shall regularly check computers and software programs used.
• Employees shall use only licensed software programs which are permitted by the Company on
the Company’s computers in order to prevent the infringement of intellectual property rights.
• Unauthorized downloads are prohibited.
• The Company discourages the use of proprietary works or information of external parties. If such works
or information are to be used, applicable procedures shall be undertaken to ensure compliance with
and respect for intellectual property rights and copyrights of others.
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ANNUAL REPORT 2014
Responsible Political Participation
The Company has adopted non-partisan approach and does not take any political side nor directly or
indirectly use the Company’s capital or resources to make political contribution to any political party or
politician in exchange for preferential treatment. In addition, our executives and employees are prohibited
from the acts of coercion, manipulation, intimidation and extortion. Our Political Contribution Policy
addresses the following aspects:
• The Company encourages employees at all levels to exercise their civil rights and political rights as
decent individuals within the scope permissible by the Constitution and the laws. Prohibitions are
imposed against abusive use of authority, position, the Company’s names or logos by employees at
all level to influence others to provide financial contributions or supports in other forms to politicians
or political parties. The Company refrains from providing direct or indirect financial contributions to
any political party or politician for their own benefit.
• The Company pledges to remain its political neutrality, non-involvement and non-participation in any
political activity and to refrain from expressing opinions which may lead to misinterpretation that the
Company is involved with or supports any political party or politician or political affiliation as such
may cause division among Thais and the Company’s employees.
• The Company’s capital and resources shall not be directly or indirectly used for the benefits of any political
party or politicians or political affiliation in exchange for preferential treatment or undue enrichment.
• The Company shall not be involved in any political canvassing or campaign of any political party or
politician.
• The Company respects the rule of democracy and encourage its employees to exercise their voting
rights under the Constitution.
Anti-Corruption
Ichitan Group Public Company Limited (“the Company”) is committed to adhering the principle of business
integrity and demonstrating responsibility towards the society and all stakeholders in accordance with the
good corporate governance philosophy, its business code of conduct and stakeholder treatment policies and
guidelines. In 2014, the Company expressed its intent and commitment to fight corruption by stipulating
anti-corruption framework and policy which was approved by the Board Meeting No. 3/2014 on 13 August
2014. The Anti-Corruption Policy is enforced on the Company’s directors, executives and employees at all
levels and entails the following:
Definitions under the Anti-Corruption Policy
Corruption means bribery in all forms such as an offer, promise, guarantee, solicitation or acceptance of
money, assets, or unethical benefits from or to the government officers, government organizations, private
organizations any persons either directly or indirectly in exchange for patronage or omission of duty for any
undue business gains and benefits which are not allowed by the laws, regulations, rules, local traditions
or customary business practices.
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Fraud means solicitation of undue and unlawful enrichment through the abuse of function by directors,
executives, the Company, customers, trading partners or contractual parties which shall include but shall
not be limited to falsification of financial evidences, use of the Company’s capital and resources for personal
gains, exploitation, embezzlement, defraud or conflicts of interest.
Corrupt payment or fraudulent benefit distribution shall include the distribution of money, assets or benefits
directly by the Company itself or indirectly through customers/trading partners or third parties.
Anti-Corruption Program
The Company’s anti-corruption program includes the following policies:
• Anti-Corruption Policy
• Political Contribution Policy
• Policy on Receiving Gifts, Assets or Benefits
• Whistleblowing and Whistleblower Protection Policy
Anti-Corruption Policy
Ichitan Group Public Company Limited (“the Company”) recognizes the importance of the good corporate
governance practice and consistently adheres to the principles of business integrity, honesty, transparency,
fairness, accountability and prudence in accordance with applicable laws, rules, regulation and standards.
The Company is highly committed to anti-corruption and does not tolerate corruption in any form.
The Anti-Corruption Policy has been established and implemented both within the organization and with
our business partners to promote transparency and integrity in every step of our process and to avoid
acts which may cause inappropriate behaviors or contravention against the principle of good governance.
Anti-bribery measures and corresponding disciplinary punishments have been also been defined.
To provide a clear framework for handling issues exposed to high level of corruption risk, the Company’s
directors, executives and employees at all levels shall proceed with extra care and prudence in relation
to the following:
• Gift, hospitality and expense: Practices related to giving and receiving gifts and hospitality shall comply
with the Company’s Code of Conduct.
• Donation and financial contribution: Donations and financial contributions made or received must be
transparent and lawful and shall in no way be used as a bribery tool.
• Business relationship with government sector: Bribery in all forms is strictly prohibited and relationship
with government sector must be transparent, honest and lawful.
Non-compliance with the aforesaid guidelines by directors, executives and employees of the Company
shall result in disciplinary actions against the violators. Disciplinary punishments shall be decided based on
facts and circumstantial evidence. According to the Company’s policy, no employee shall suffer demotion,
punishment or negative consequence from their anti-corruption actions even if such actions may result
in the Company’s loss of business opportunity.
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Political Contribution Policy
Political support refers to contributions in cash and in kind and/or participation or promotion of employees’
participation in political activities in the name of the Company in exchange for business advantages.
This shall exclude the participation of employees as individuals in political activities according to their
civil liberties.
The Company has adopted non-partisan approach and does not take any political side nor directly or
indirectly use Company’s capital or resources to make political contribution, as defined by the above
paragraph, to any political party or politician in exchange for preferential treatment.
The Company’s Political Contribution Policy:
• The Company encourages employees at all levels to exercise their civil rights and political rights as
decent individuals within the scope permissible by the Constitution and the laws. Prohibitions are
imposed against abusive use of authority, position, the Company’s names or logos by employees at
all level to influence others to provide financial contributions or supports in other forms to politicians
or political parties. The Company refrains from providing direct or indirect financial contributions to
any political party or politician for their own benefit.
• The Company pledges to remain its political neutrality, non-involvement and non-participation in any
political activity and to refrain from expressing opinions which may lead to misinterpretation that the
Company is involved with or supports any political party or politician or political affiliation as such
may cause division among Thais and the Company’s employees.
• The Company’s capital and resources shall not be directly or indirectly used for the benefits of any political
party or politicians or political affiliation in exchange for preferential treatment or undue enrichment.
• The Company shall not be involved in any political canvassing or campaign of any political party or
politician.
• The Company respects the rule of democracy and encourage its employees to exercise their voting
rights under the Constitution.
Policy on Receiving Gifts, Assets or Benefits
Ichitan Group Public Company Limited stipulates that giving or receiving gifts, assets or benefits must be
within a reasonable scope and shall in no way have influence on the Company’s judgment.
On receiving money or benefit: Directors, executives and employees shall not personally accept money
or benefit given by customers or trading partners of the Company or any other persons because of
their positions in the Company and shall not demonstrate acts or behaviors that might be suspected
as bribery or fraud.
Directors, executives and employees shall not lend or borrow or solicit funds or in-kind contribution
from customers or business partners of the Company, except where they borrow funds from banks or
financial institutions as customers of such banks or financial institutions themselves.
On receiving and giving gifts and entertainment: Directors, executives and employees shall refrain from
receiving pecuniary and non-pecuniary gifts from trading partners of the Company or other parties
involving with the Company unless such gifting is customary for special occasions or festivals. Gifts and
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entertainments received or given shall in no way have influence on the recipients’ business judgment
and shall be reported to supervisors according to the line of command. Gifts received should not be
excessive in value and should not be cash or cash-equivalent. Giving and receiving of gifts are allowed
if they are transparently and publicly made and disclosed.
Directors, executives and employees are allowed to receive business entertainments for business
benefits of the Company and shall avoid extravagant or lavish entertainments from parties involved in
the Company business or potential business partners of the Company.
• On incentives and rewards: It is the Company’s policy not to offer incentives, rewards or privileges in any
form to its customers, trading partners or third parties in exchange for business deals, except for those
being customary business entertainments, trade discounts or promotional activities of the Company.
Whistleblowing and Whistleblower Protection Policy
Ichitan Group Public Company Limited has made available whistleblowing channels as detailed below:
1. Objectives
2. Whistleblowing scope
3. Whistleblowers
4. Whistleblower protection
5. Whistleblowing channels
6. Related parties
7. Process
7.5 Case registration and escalation
7.5 Investigation and instruction
7.5 Progress reporting to whistleblower and rectification
7.5 Malicious whistleblowing and use of wrong whistleblowing channels
7.5 Responsibilities of case coordinators, case owners and upper level managers
1. Objective
Ichitan Group Public Company Limited encourages its executives, employees and staff to adhere to the
principles of transparency, integrity and disclosure, good corporate governance practices, and the Company’s
code of conduct. Acts which violate or appear to violate the aforesaid principles should be reported in
good faith to the Company in order to solve such issues and promote integrity, transparency and fairness.
According to the Securities and Exchange Act, whistleblowers who report cases in good faith to regulators
shall be protected and the same is applied by the Company.
The Company has established the Whistleblowing and Whistleblower Protection Policy to provide the
management and Human Resources team with the framework for monitoring and supervising behaviors,
conducts and acts employees and staff as well as offering consultation. Whistleblowers who report cases
in good faith shall be protected.
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2. Whistleblowing Scope
When there are reasonable doubts or concerns about non-compliance with the laws, rules, good corporate
governance principles, code of business conducts, policies, regulations or requirements of the Company,
employees and staff should seek consultation from their supervisors. Or, they can report their concerns
and complaints through the following channels:
• Cases related to other units or upper-level management should be filed with CG Report or the Company
Secretariat or Internal Audit or the Audit Committee.
• Cases related to the CEO should be filed with the Audit Committee.
3. Whistleblowers
Employees or staff of Ichitan group and third parties who witness or have concern about non-compliance of
the Company’s executives, employees or staff with the laws, rules, good corporate governance principles,
code of business conducts, policies, regulations or requirements of the Company can raise their concerns.
4. Whistleblower Protection
Employees or staff who report cases, concerns, evidence or useful information within the scope as
mentioned in 2 above with good faith shall be reasonably protected by the Company from victimization
such as job transfer, suspension, intimidation, disturbance or employment termination or any other form
of unfair treatment. Change to or cancellation of the protection program shall be subject to prior approval
from the Audit Committee.
• Claimers/informants can choose to remain their anonymity. In order to be better able to respond to any
information or complaint, the Company would prefer the claimers/informants to reveal their identities
to the Company.
• Information related to concerns and complaints raised shall be treated with confidentiality and claimers
and informants will be protected against unfair treatment and retaliation.
• The Company may tighten its whistleblower protection program upon request by claimers/informants
or as the Company deems appropriate.
• Remedial actions will be undertaken on the basis of appropriateness and fairness to abate the injury
suffered by victims.
5. Whistleblowing Channels
5.1 CG Report
• Telephone: 02-716-5555
• E-mail : [email protected]
5.2 Company Secretariat
• Address: Company Secretariat, Ichitan Group Public Company Limited
28th Floor, Charn Issara II Building, 2922/301-303, New Pethchburi Road, Bangkapi, Huaykwang,
Bangkok, 10310
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5.3 Internal Audit
• Telephone: 02-716-5555
• E-mail: [email protected]
• Address:
Internal Audit, Ichitan Group Public Company Limited
Bangkok, 10310
5.4 Audit Committee
• E-mail
Audit Committee: [email protected]
Secretary to the Audit Committee: [email protected]
The cases received via this channel will be proposed to the Audit Committee, investigated and
reported to the Board.
• Address:
Audit Committee, Ichitan Group Public Company Limited
Bangkok, 10310
6. Related Parties
Parties related to the whistleblowing process include:
6.1.Callers or claimers: Persons, including internal and external parties, who report cases to the Company.
6.2.Case coordinators: Persons in charge of receiving cases and retaining relevant information and
results, namely CG Report, Company Secretariat and Internal Audit.
6.3.Case owners: Direct supervisors of employees who are complained or executives directly in charge
of the units which are complained. In case where such case owners are not available for a long
period of time, their supervisors shall assume the role of case owners in their stead.
6.4.Disciplinary action owners: Human Resources (HR).
6.5.Chief Executive Officer (CEO): Top executive of the Company.
6.6.Audit Committee
6.7.Board of Directors
7. Process
7.1.Case registration and escalation
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ANNUAL REPORT 2014
(1) Case coordinators register cases reported and determine the date the case progress will be reported back
to callers/claimers according to the following guideline:
• Cases which have serious impact on the Company’s reputation shall be handled immediately.
• Other cases shall be handled as soon as possible.
• General inquiries such as inquiries about share prices and dividend payment shall not be registered
bit shall be forwarded to relevant units.
(2) Case coordinators shall record the following information:
• Name of caller/claimer, unless in the case of anonymity.
• Date of case reporting
• Name of person complained or subject of complaint
• Other relevant information
(3) Following the registration, the classification levels of the cases shall be identified (except for general
inquiries) and the following actions shall be undertaken:
• Cases shall be escalated to case owners for investigation and consideration of actions to be
undertaken within their scope of authority.
• Cases shall be reported to Human Resources for information which shall provide consultation or
initiate disciplinary action or other action as applicable.
• Cases shall also be reported to CEO.
• Cases and complaints related to the CEO shall be escalated to the Audit Committee.
7.2.Investigation and action
• Case owners investigate the cases and instruct complainees and related parties to improve their
behaviors and conducts. If disciplinary actions must be undertaken, case owners shall consult with
Human Resources and impose disciplinary punishment against complianees in accordance with
applicable disciplinary standard. If case owners do not have the authority to punish complianees, such
cases shall be escalated to authorized persons whereas the investigation results, actions taken and
punitive measures to be implemented shall be submitted to CEO through supervisors of case owners
in accordance with the line of command for information or instruction.
• If the callers/claimers are anonymous and available information is not sufficient, case owners shall
submit investigation results and their opinions to CEO through their supervisors in accordance with the
line of command in order to solicit guidance and instruction. If CEO is of the opinion that such cases
cannot be proceeded, the cases will be closed and reported to case coordinators concerned in order
to report the case closure to the Audit Committee.
• If the investigation conducted by case owners reveals that complainees are innocent or the cases are
caused by misunderstanding or if the complianees and persons involved have been admonished to
demonstrate proper conducts and it is thus concluded that the cases should be closed without any
punishment, the case owners should submit the cases to their supervisors (1 level above) to seek
approval for case closure. The cases shall also be reported to the case coordinators, who will inform
the callers/ claimers of the update,
101
• Complaints related to CEO shall be investigated by the Audit Committee and escalated to the Board
for instruction.
7.3.Response to Caller/Claimer and Rectification
• Case owners shall follow the instructions of CEO or the Board (as applicable) and recommended proper
conducts which should be demonstrated. The results shall be reported to case coordinators.
• Case coordinators report the results to callers/claimers and record the case results which shall be
presented to the Audit Committee on a quarterly basis.
• Case coordinators shall follow up on corrective actions (if any) and report the results thereof to CEO
and the Audit Committee.
7.4.Malicious whistleblowing or use of wrong whistleblowing channels
Complaints, whistleblowing, statements and information which are reported with malicious intention
or through incorrect channels could result in disciplinary actions or legal actions may be taken against
individuals committing such offence.
7.5.If case coordinators or case owners demonstrate ignorance or do not comply with this policy, they
and their supervisors shall be subject to disciplinary actions.
Respect for Human Rights
Policy on Human Rights
The Board respects the human right laws and principles and recognizes that all humans are born free and
equal in dignity and rights without distinction of any kind, such as social origin, race, nationality, color, sex,
religion, age, language, physical and mental health, personal, financial or social status, belief, education
or political or other opinions. Also, the Company has strived to foster the awareness of individuals’ rights
and responsibilities towards the society and other citizens. Our policy and guidelines on human rights are
as follows:
1. To operate our business in strict compliance with the human right laws and principles and educate
our employees in the human right laws and principles to promote their compliance.
2. To ensure that all employees thoroughly study and strictly comply with laws applicable to their duties
and responsibilities.
3. To encourage the respect for and adherence to the principles of human rights in recognition of equality
and dignity of all humans.
4. To treat employees with dignity and respect as individual.
5. To avoid discrimination and offer equal employment opportunities to all individuals, including women,
the disabled or the underprivileged.
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6. To refrain from the acts of discrimination or preferential treatment based on race, nationality, color,
sex, religion, age, language, physical and mental health, personal, financial or social status, belief,
education and political opinions.
ANNUAL REPORT 2014
7. To ensure that our facilities are properly equipped to accommodate employees with disabilities.
8. To establish policies or measures to screen the qualifications of its major trading partners such as
suppliers or contractors to ensure that they adopt the principles of fair business and do not infringe
human rights.
9. To encourage employees’ involvement and respects their rights to form groups, offer recommendations
or suggest suitable directors and solutions for the mutual benefits of all relevant parties and healthy
relationship.
The Company has made available channels for reporting our employees’ violation of human rights including
their involvement in or ignorance of such violation. Employees and parties witnessing acts of our employees
which appear to be a discrimination or an infringement of human rights or the violation of the Company’s
policy or the laws in this respect can report their concerns to the Company through the following channels:
• Supervisors
• Human Resources
• Office of CEO
• By mail
Human Rights Infringement Complaint Center
2922/301-303, 28th Floor, New Pethchburi Road, Huaykwang,
Bangkapi, Bangkok, 10310
Email: [email protected]
Upon being notified of such infringement, the Company will proceed with further actions as deemed
appropriate. Confidentiality of information and privacy of parties involved in the investigation process will
be strictly protected. However, the Company cannot guarantee complete confidentiality. The investigative
process may require the Company to contact the individuals who may have engaged in prohibited conduct
as well as witnesses to such conduct. If the Company concludes that a violation of this policy has occurred,
violators will be subject to disciplinary action, up to and including employment termination.
Fair Labor Practice
Human resources are the most valuable asset of the organization and a key driving force that will move
the Company towards its goals and sustainable growth. The Company has professionally implemented a
solid and effective human resources management system, from recruitment to people development, to
enhance our employees’ knowledge, potential, sense of ownership, positive attitude and sense of duty
towards the organization, their family and the society. Our human resources management practices are
based on the good corporate governance principles and aim to promote mutual trust. Employees are
encouraged to actively participate in driving positive changes within the organization, recognize their
rights and duties, and adhere to the principles of ethics and integrity. The Company complies with the
fair labor treatment practices, including the laws and the code of ethics, in order to promote peace and
security of the society and the sustainable growth of the organization. We have integrated the Declaration
103
on Fundamental Principles and Rights into our employee treatment practices in accordance with relevant
laws and internal regulations and concurrently protect the occupational health and safety of our employees.
Our fair labor practice guidelines are as follows:
Recruitment and Employment
For effective recruitment process, we have rigorously screened the qualifications of candidates in terms
of their knowledge, competencies, experience, attitude and behaviors through written exams, tests and
interview. Successful candidates shall be placed on probation which covers a period of up to 119 consecutive
days, during which they shall prove their ability or potential to deliver and perform their functional duties
in accordance with the Company’s standard. The Company’s recruitment is free of discrimination and
offers equal opportunities to all individuals without distinction of any kind such as political opinions, age
or disabilities. In addition, the Company has also put in place the mechanism to eliminate vulnerability
to unequal treatment.
Employee Development
It is the Company’s policy to encourage continuous learning and development, and offer career growth
opportunities and equal promotion opportunities among male and female employees. The Company has
regularly reviewed and assessed its relevant practices and processes to enhance its compliance with the
policies on employment and career growth promotion.
Working Hours
To avoid overwork, standard working hours are limited in accordance with applicable practices and can
be divided into 2 patterns:
• Office work: Mondays to Fridays, from 08.30-17.30 hrs.
• On-site work: Working hours shall be as agreed with supervisors and customers within the scope
permissible by the Labor Protection Act B.E. 2541 and applicable laws.
Remuneration
The Company offers fair remuneration to its employees in the form of salary at the rates comparable to
the market and special compensation in the event of job transfer or promotion. Rewards and fringe benefits
are commensurate with employees’ knowledge and competency to ensure fairness, appropriateness and
equal treatment. Remuneration scheme is reviewed regularly.
Disciplinary Action
Employees demonstrating avoidance and violation of rules and prohibition shall receive warnings from
their supervisors according to basic administrative principles. The Company does not compromise or
tolerate unfair punishment, or physical, verbal or psychological harassment. The severity of punishment
will be considered in accordance with disciplinary procedures and based the type of offence, intention,
consequence and merits whereas severance pay will be given to employees who are punished in form of
employment termination in accordance with applicable labor laws.
Advocacy Against Unlawful Child Labor
The Company does not exploit child labor or forced labor or slave labor, except where such employment is
within the scope permissible by the laws and complies with rules and regulations governing age, working
hour, pay, health and safety.
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ANNUAL REPORT 2014
Internal Communication
The Company is committed to communicating the letter and the spirit of all of its policies across
the organization through mechanisms which include the onboarding program and internal communication
channels of Human Resources. Formal and information meetings were held to share with our employees
the Company’s performance, status and other relevant information as and when appropriate and upon
internal change in order to solicit opinions from employees and encourage their involvement in driving
positive changes.
Grievance Procedure
The Company has established internal grievance procedures and channels to allow employees to air their
workplace-related grievance and personal issues via email at [email protected] and raise concerns
about harassment, unequal treatment, right infringement and victimization.
Positive Work Environment
The Company is committed to a workplace that provides dignity and respect to promote occupational health
and safety and pleasant environment. The Company also strives to encourage employees to balance their
personal and work life and do exercise for their good health.
Betterment of Quality of Life
The Company is committed to the betterment of the quality of life and well-being of our employees
by encouraging them to plan their financial future and achieve work-life balance.
Responsibility Towards Consumers
The Company has attached importance to the health and safety of our consumers and aspires to achieve
the highest level of quality and hygienic product standard. Therefore, we have engaged food safety experts
in our process and arranged trainings for all employees to enhance their knowledge, understanding
and compliance with our standards which are in line with certification standards widely recognized.
Our guidelines on responsibility towards consumers encompass the following:
• Respect the consumers’ right to satisfaction of basic needs
• Respect the consumers’ right to safety
• Respect the consumers’ right to be informed
• Respect the consumers’ right to choose
• Respect the consumers’ right to be heard
• Respect the consumers’ right to redress
• Respect the consumers’ right to consumer education
• Respect the consumers’ right to healthy environment
105
Environmental Protection
The Company has endeavored to protect the environment by minimizing the environmental impact
of its business operations and complying with the rules and laws governing environmental protection.
The Company’s guidelines on environmental protection are as follows:
• Establish environmentally friendly work process and practices
• Evaluate the results of its work processes and practices regularly
• Study and analyze the results to identify areas for improvement
• Foster environmental awareness and consciousness among our employee
Contribution to Community and Society
The Company is committed to the synchronous growth of its business, the community and the society
to live up to its philosophy of environmental protection and social responsibility. We are fully aware that
the seed of generosity grows into a great society and, as a decent corporate citizen, aim to pay back to
the community through environment protection, development of the community and society, and the
betterment of quality of life of local residents by creating job opportunities and diversifying economic
activities to strengthen local entities and communities.
Community and society development activities have been carried out through the collaboration between
the Company and local communities affected by the Company’s operations or initiatives in order to
strengthen and restore cultural and environmental richness. In addition to these CSR activities for nearby
communities, we have also implemented outreach program for the benefits of communities in distant
areas. The Company’s CSR Policy covers the following:
• To achieve sustainable growth of the Company and concurrently contribute to environmental preservation
and the society betterment.
• Utilize our business strengths and professional expertise for CSR activities.
• Initiate CSR activities for the far-reaching benefits of communities in nearby and remote areas.
• Optimize the use of renewable resources and local supplies in accordance with the sufficiency economy.
CSR Roadmap
Our CSR roadmap is based on the following framework:
• Community development and contribution activities such as donation to school should be organized
at least once annually.
• Emergency program in response to incidents caused by the Company’s business operations shall be
immediately
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ANNUAL REPORT 2014
Our business operations, especially our corporate social responsibility, have evolved around the awareness
and sense of responsibility of our executives and employees at all levels who are determined to avoid acts
which potentially cause undesirable consequences or jeopardy to others parties, including all stakeholders,
the economy, the society and the environment. We also attempt to refrain from contravening the laws, rules,
conditions or cultural traditions of the local communities. The Company’s operations is strictly governed by
the principle of business integrity, professional ethics and good corporate governance for the ultimate goal
of transparency, honesty and fairness. Our business is guided by the philosophy of sufficiency economy
and operated on the basis of prudence and carefulness. Also, the Company aims to actively contribute to
the betterment of the society and communities in nearby and remote areas.
Dissemination of CSR-Driven Innovation
Innovations driven by our CSR goals under the Greenovation thrust have been shared with the organizations
through Tan’s Land to promote resource conservation awareness and respect for the nature. The learning
center showcases successful innovations which have been inspired by our commitment to corporate
social responsibility and led to the shift of paradigm as well as the improvement and transformation of
work processes for enhanced efficiency and effectiveness included added value for the business and all
stakeholders in the longer run.
The CSR-oriented innovations, such as the production process improvement, are beneficial not only to the
Company’s solid growth, competitive advantages and sustainability but also to the betterment of Thailand
with respect to its economy, the well-being of Thais, and the preservation and restoration of the environment.
Innovations of the Company are meaningful to our CSR commitment. They are not only driven by our
CSR goals but also, in turn, contribute to the economic and social development, value creation and
the equilibrium between business imperatives and social responsibility.
Guidelines
• The Company fully recognizes the benefits of socially responsible business practices to value-added
innovations.
• t is the Company’s policy to promote the advantages and benefits of socially responsible business
practices in the same way it promotes the same of innovation development, especially through the
Sustainability Report which illustrates our CSR activities.
• The Company aims to conceive and research for new, unconventional ideas and knowledge in respect
of business, economic, social, technological and environmental development.
• The Company engages internal and external parties in its value-added innovation development
processes.
• The Company keeps abreast of new studies, researches and innovations to support its innovation
development projects.
• The Company aspires to develop innovations which benefit the Company and the society as a whole.
Our innovations shall not cause destruction, terrorism or adverse impact on stakeholders.
107
• The Company fosters the culture of innovation in which creativity are welcomed and can be freely
expressed to promote innovation from within.
• The Company collaborates with stakeholders such as trading partners on the development of
CSR-driven innovations and promote CSR awareness by sharing our innovations and being a role
model in CSR-driven innovation development.
• The Company regularly reviews its businesses and work processes to identify risks or undesirable
impact thereof on the society and the environment in order to immediately eliminate such risks and
impact, if any.
• The Company integrates its CSR commitment with business goals in the context of Thailand to balance
its efforts to improve the productivity, quality and competitive advantages with its contribution to the
society and the economy.
• The Company strictly protects and respects confidential information and intellectual properties of others
in the same manner as it does for its confidential information and intellectual properties.
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Internal Control and
Risk Management
ANNUAL REPORT 2014
The Company has always attached significance to effective internal control system in accordance with the
good corporate governance principles which aims to promote transparency, fairness, integrity, disclosure,
and checks and balances for the ultimate benefits of the shareholders, employees and stakeholders.
The Audit Committee, at its Meeting No. 1/2015 held on 25 February 2015, and the Board of Directors, at
its Meeting No. 1/2015 held on 25 February 2015, with the participation of the 3 Audit Committee members
reviewed and assessed the adequacy of the Company’s internal control system through the interview of
the Company’s management team and the internal control adequacy assessment questionnaire which
addressed 5 dimensions of the internal controls: 1) Control environment 2) Risk assessment 3) Control
activities 4) Information and communication 5) Monitoring activities.
The Company has established the Internal Control Policy and the Risk Management Policy and the Audit
Committee has been delegated to review and assess the internal control system to ensure that it is adequate
and appropriate for the Company’s business operation. In this regard, Mr. Sumol Hobampen has been
appointed as the internal auditor.
The Board is of the view that the Company’s internal control system is adequate and appropriate for
its business operations. The Board has also encouraged the management team to continuous enhance
the Company’s internal control system to promote good corporate governance. The results of the internal
control system assessment which have been reviewed by the management team are as follows:
Control Environment
The Company has good organizational structure and environment which contribute to the effective
implementation of the internal control system in accordance with the Company’s plan and policy.
The Board has emphasized and adhered to the principles of integrity, legitimacy and ethics as well as
fostered the awareness and environment that are conducive to effective internal control and a sense of
duty and responsibility across the organization. In addition, our organizational structure also enhances the
management’s effectiveness. To support the internal control system, the Company has established clear
and measurable business goals, policies, work processes, scope of authority, duty and responsibility of
each line of operations. KPIs have also been reasonably and fairly set and deployed for the achievement of
the corporate business goals as well as the checks and balances. The internal audit team directly reports
to the Audit Committee and has a dotted line relationship with the Board. The Company also has in place
the human resources management policy as a framework for effective recruitment, development, retention
and motivation of quality employees who possess desired capabilities, knowledge, skills and traits which
contribute to the achievement of the Company’s goals.
Risk Assessment
The Company’s executives have attached significance to risk management and the Company’s risk
assessment methodology has been aligned to its business objectives and goals. Prevailing and potential
109
risks have been identified, analyzed and assessed to devise appropriate risk monitoring and control
measures to minimize risk probability and impact. Comprehensive risk analysis has been conduct to
identify the materiality of internal and external risk factors such as changes in consumer behaviors, raw
material shortage, intense competition, business imperative for new product development, debt servicing
ability, access to finance, and interest rate increase on the Company’s operations, business and goal
achievement. Internal fraud is another risk issue that the Company has seriously addressed and prevented
through the communication and implementation of the Whistleblowing Policy across the organization.
Practices and policies have been regularly reviewed and updated to employees. Our management team
is fully aware of changes and their associated risk and has adequately and appropriately monitored the
causes of risks. The Risk Management Committee which directly reports to the Board regularly meets to
strategically prevent, mitigate and manage risks which might harm the Company’s performance, business
or reputation. The Company also has a dedicated risk management team in charge of risk management,
monitoring and assessment.
Control Activities
The Company has effectively controlled operations executed by the management team through the clear
written scope of approval authority and limits of executives at each level in, segregation of duties and
organizational structure which contributes to clear scope of duties and responsibilities and line of command
of every division. Related-party transactions and potential conflicts of interest are escalated to the Audit
Committee for consideration and to the Board for approval in strict compliance with applicable procedures,
rules and regulations.
Information and Communication
The Company’s data storage and information systems which are adequate and can effectively support
its business operations. Data and information related to internal control have also been compiled, used
for control activities and communicated to relevant employees at each level based on their scope of
responsibility for correct and mutual understanding. The Board has been supplied with adequate information
to support their decision-making. In addition, meeting documents have been delivered to the directors prior
to each Board meeting in accordance with the regulatory requirements. Documents are filed and retained
systematically by category and accounting and financial documents which are essential for financial
reporting are reviewed by the Board. The Company has also established effective and appropriate internal
and external communication tools to provide our staff with convenient access to information necessary
for their performance of duties and our stakeholders with channels to voice their suggestions/complaints
as well as share and retrieve information through, for example, our consumer hotline/call center and
investor relations.
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ANNUAL REPORT 2014
Monitoring Activities
The Audit Committee reviewed and approved the annual audit plan of the Company as well as jointly
deliberated on audit findings and issues with the internal audit team. The auditor was also invited
to present the results of financial statements audits and internal control issues to the Audit Committee.
The Company has regularly monitored its internal control performance through the internal audit team to
ensure compliance with established policies and operating procedures. Compliance monitoring reports
have also been prepared and presented to the Audit Committee and the Board for consideration to support
corrective actions required.
Monitoring activities have been regularly undertaken by the Company to monitor and evaluate in-process
and after-action internal control against established targets by taking into account the ever-changing
operating environment of the Company.
Profile of Internal Audit Head
Name-Surname
: Mr. Sumol Hobumphen
Position
: Internal Audit Manager
Age
: 37 years
Nationality
: Thai
Education/Training
:
• Master of Science in Corporate Governance, Chulalongkorn University
• Bachelor of Accounting, Rajamangala University of Technology, Phanakhon
• Certified public accountant, Federation of Accounting Professions Under the Royal Patronage
• Endorsed Internal Auditing Program (EIAP), Class 9, Chulalongkorn University
• Internal Auditing Program, Federation of Accounting Professions Under the Royal Patronage
Shareholding (%)
: None
Family Relationship with Executives
: None
Work Experience:
• Positions in companies listed on the Stock Exchange of Thailand
Year
2013 – Present
2006 – 2009
Position
Manager, Internal Audit
Assistant Manager, Internal Audit
Company
Ichitan Group Pcl.
Thanulux Pcl.
• Positions in companies not listed on the Stock Exchange of Thailand
Year
2011 – 2013
1999 – 2006
Position
Manager, Internal Audit
Assistant Manager, Internal Audit Division
Number of Internal Audit Team Personnel
• The Company’s internal audit team consists of 2 members.
Company
Perfect Engineering Service Pcl.
Dr. Virach & Associates Office
111
Related-Party Transaction
Related Party and Relationship
Related Party
1. Mr. Tan Passakornnatee (Mr. Tan)
2. Mrs. Eng Passakornnatee (Mr. Eng)
3. I Am Green Tea Co., Ltd. (IGT)Distributes
beverage products of the Company
and is granted the right from Mr. Tan
Passakornnatee to produce and sell
products with Mr. Tan’s pictures,
drawings, symbols and work of design of
Mr. Tan Passakornnatee for 5 years.
4. Japanese Prime Restaurants
Management Co., Ltd. (JPRM) Operates
restaurant business
Relationship
• Director and major shareholder of the Company
• Director and major shareholder of the Company
• Miss Tantita Passakornnatee, the elder sister of
Mr. Tan Passakornnatee owns 80% equity in IGT.
• Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee
are directors of both Ichitan and JPRM.
• Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee
are major shareholders owning the aggregate equity of
86% in JPRM.
5. Passakornnatee Co., Ltd. (PAS) Operates • Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee
hotel business
are directors of both Ichitan and PAS.
• Mr. Tan Passakornnatee and Mrs. Eng
Passakornnatee are major shareholders owning the
aggregate equity of 80% in PAS.
6. Kin Kub Tan Co., Ltd. (KIN) Operates
• Mrs. Eng Passakornnatee is director of both Ichitan
restaurant business
and KIN.
• Mrs. Eng Passakornnatee is major shareholder
owning 79.7% equity in KIN.
7. Tan Asset Co., Ltd. (TAN) Operate land
• Mr. Tan Passakornnatee, Mrs. Eng Passakornnatee
leasing and soccer field rental service
and Miss Varisa Passakornnatee, Mr. Tan’s daughter,
are major shareholders owning the aggregate equity
of 91.1% in TAN.
8. Ezili Co., Ltd. (EZL) Operates restaurant • Mr. Tan Passakornnatee, Mrs. Eng Passakornnatee
business
and Mr. Jaruworn Sukpanthaworn, Mrs. Eng’s
younger brother, are major shareholders owning the
aggregate equity of 54% in EZL.
9. Kin Rong Deum Co., Ltd. (KRD)
• Mrs. Eng Passakornnatee is the major shareholder
Restaurant and karaoke business
owning 48.8% in KRD.
10. Tan Boon Co., Ltd. (TANBOON) Operates • Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee
real estate business
are directors of both Ichitan and TANBOON.
• Mr. Tan Passakornnatee, Mrs. Eng Passakornnatee
and Miss Varisa Passakornnatee, Mr. Tan’s daughter,
are major shareholders owning the aggregate equity
of 90% in TANBOON.
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ANNUAL REPORT 2014
Related-Party Transaction
Related-party transactions of the Company in 2013 and 2014 did not cause conflicts of interest and are listed below:
Related
Party
1. I Am
Green
Tea
Co., Ltd.
(IGT)
Transaction
Transaction
Value (MB)
2013
2014
Revenue from 1,034.43 782.08
sales
Outstanding
balance at
the end of the
accounting
period
206.92
38.24
Necessity and Rationale
•Sales of the Company’s beverage products to IGT which
is the Company’s distributor through the traditional trade
channel under the agreement dated 20 June 2011, effective
from 1 July 2011 – 30 June 2014. The agreement was
renewed on 20 June 2014 and is valid from 1 July 2014 –
30 June 2017.
•IGT must buy beverages at the selling prices determined
by the Company as of the date IGT sells beverages to its
customers. The Company issues invoices at the selling
prices comparable to those applied to other traditional
trade distributors of the Company.
•Audit Committee’s Opinion
The Audit Committee viewed that the target customers
of IGT did not overlap with those of other distributors of
the Company and this distribution through IGT would help
expand the Company customer base. Product pricing
applicable to IGT was fair, competitive and higher than
other trading partners. Therefore, the Audit Committee
concluded that the transactions were reasonable and in
the normal course of business operations.
Expenses
on sales
promotion
(giveaways)
Outstanding
balance at
the end of the
accounting
period
13.86
40.86
-
10.07
•Reimbursements paid to distributors for giveaways
offered to customers under the monthly sales promotion
in accordance with the distribution agreements. The
monthly reimbursements were calculated at the same
prices charged to IGT and approved by Senior Executive
Vice President.
The Audit Committee opined that the monthly giveaway
promotions were beneficial to the Company and was in the
normal course of business operations. Monthly giveaway
promotions were reviewed by executives and approved
by Senior Executive Vice President. The reimbursements
were calculated at the same prices charged to IGT and the
practice has been applied consistently to all distributors
of the same channel.
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114
1. IGT (Cont.)
Expenses on
promotional
campaign Fridges
Outstanding
balance at
the end of the
accounting
period
Related Party Transaction
-
0.09
2014
0.09
2013
Transaction
Value (MB)
•The Company sponsored beverage fridges to 5 operators, i.e. 2 food courts (1 fridge for each),
1 school (1 fridge), 1 restaurant (2 fridges) and 1 TV program production company (1 fridge)
to showcase the Company’s products in its TV programs. Operators can request beverage
fridges from the Company through IGT which would forward the request to Traditional Trade
& Event Marketing Director for approval. The models and size of beverage fridges will be
decided by the Company while IGT will handle the fridge purchase and delivery to operators.
The costs will then be charged to the Company without markup. These transactions were
in accordance with the Company’s Beverage Fridge Sponsorship Policy of the Company
which has been communicated to all operators. Entitled operators must meet the following
qualification requirements and criteria:
»»Qualifications: 1) The place of business must be in a populated area and the request must be
initiated by an operator. 2) Average sales in the previous 6 months must be at least 30 crates
per month. 3) The decision shall be at the Company’s discretion.
»»Conditions: 1) Trademark labels as determined by the Company must be attached to
the fridges. 2) There must be at least 80% of Ichitan beverages in the fridge. IGT sales
representatives will inform the operators of terms and conditions in further details upon
the fridge handover.
»»Repair costs: Repair costs incurred during the first 3 years from the fridge handover date
shall be absorbed by the Company at 50% or less and will be reimbursed through the
distributors.
This could be considered a promotional activity which helped strengthen the Company’s
brand presence and products. All of these transactions were in accordance with the Beverage
Fridge Sponsorship Policy and the qualifications of the operators requested for the fridges were
considered carefully by Traditional Trade & Event Marketing Director. The payback period is
less than 1 year considering the cost of fridges and sales performance of those operators plus
the extra benefit of brand promotion.
For the sponsorship transaction to TV production company, the Company received the benefits
of promoting its products and brands on TV program. IGT charged the Company for the fridges
at their costs and were comparable to other distributors. Thus, the transactions were considered
reasonable and beneficial to the Company.
1. IGT (Cont.)
Outstanding
balance at
the end of the
accounting
period
Expenses on
promotional
activities –
premium gifts
1.16
-
-
2014
1.55
2013
Transaction
Value (MB)
•Purchase of specially-designed premium gifts (Mr. Tan figurines and gifts such as bags, money
boxes and drinking glasses displayed at Tan’s Land at Rojana Industrial Park in Ayutthaya)
•The transactions were in accordance with the license agreement dated 1 July 2011 made
between the Company and IGT to authorize the production and distribution of products with
pictures of Mr.Tan including products featuring his drawings, symbols and work of design,
subject to the condition that such products must be sold only to entities which Mr. Tan serves
as a director or hold shares in. No license fee was charged but Mr. Tan reserved the right
to dictate the selling prices of such products and IGT can mark up the prices only by 10%
at a maximum as its management fee.
Audit Committee’s Opinion
Sale of gifts with Mr. Tan’s pictures and works of design originated from the Company’s drive
to quickly establish its brand presence at the initial stage of the Company. Thus, Mr. Tan
was the Company’s presenter and products bearing his pictures and works of designs were
displayed and sold to visitors. Nonetheless, the Company would not link its brand image
entirely to Mr. Tan and has planned to engage other presenters in its promotional activities
and advertisements in the future. Moreover, the Company commercially sold such products
to end-consumers at a profit. Thus, the transactions were beneficial to the Company and
conditions of the transactions were in line with the license agreement. The Audit Committee
opined that the transactions were reasonable, fair and beneficial to the Company.
ANNUAL REPORT 2014
115
116
1. IGT (Cont.)
Outstanding
balance at
the end of the
accounting
period
Transportation
expenses
0.05
-
0.02
2014
0.57
2013
Transaction
Related Party Transaction Value (MB)
The Audit Committee viewed that the transactions originated from causes beyond the Company’s
control and the hike in demand during the promotion periods. The goods pickup by IGT’s partners
at the Company’s factory was reasonable and helped prevent the shortage of the Company’s
products in the market which, if happened, would harm the Company’s reputation. In addition,
the transportation service was charged at the actual costs and market comparable. Thus,
the transactions were considered reasonable.
•The promotional campaigns led to a surge in demand for Ichitan products and the Company
could not deliver the products to IGT’s distribution center on time. Therefore, IGT’s partners
hired transportation trucks to pick up the products at the Company’s factory while the Company
was responsible for the actual transportation expenses.
1. IGT (Cont.)
(These
transactions will
not recur.)
Auto part
expenses
Outstanding
balance at
the end of the
accounting
period
-
-
2014
0.14
2013
Transaction
Value (MB)
•These transactions included a repair in May 2013 which cost Baht 68,224. The repair was
necessary for the Company’s truck which broke down during the delivery of goods to a
sales promotion event outside Bangkok. The repair cost according to an authorized dealer’s
assessment was Baht 150,000. However, expert automotive mechanics advised the Company
to buy spare parts from a third-party spare part dealer which has provided services and offered
special discount to IGT because it was a second-hand truck that had been in use for 8 years
and was no longer covered by the authorized dealers’ protection plan. The IGT mechanics
coordinated the repair and the purchase of spare parts for the Company by using IGT’s credits.
The expenses were subsequently charged by IGT to the Company and the costs of repair and
spare parts were around 4% cheaper that the costs charged by car repair centers in general.
•The remaining 5 transactions occurred in the second quarter (2 transactions) and the third
quarter (3 transactions) which were: 1) Change of tires for 1 truck (4 tires) which cost Baht
11,657 because it was found during the transportation of goods to IGT that the tires worn
out. The tire change service as provided by a third-party garage at paid on IGT’s credit. 2)
Change of anti-vibration mounting which cost Baht 10,006 because the old mounting was
damaged. 3) Change of brake set which cost Baht 9,744 to replace the old set. 4) Change of
air compressor which cost Baht 26,407 because the old one burned up and leaked. 5) Change
of air conditioner which cost Baht 11,340 to replace the old one which leaked. The Company
bought spare parts from third-party garages/shops that IGT is a member by using IGT’s credits
for special discounts and IGT’s automotive mechanics helped with the purchases and repairs.
•Expenses from all of the aforesaid transactions were paid by IGT and subsequently reimbursed
by the Company at the actual cost plus the service fee of up to 5%. The Company did not have
a policy to procure automotive repair services from IGT but the incidents were unexpected.
Such transaction did not occur in the fourth quarter and will not recur in the future.
The Audit Committee viewed that the Company had its own contractual garages but the
incidents were unexpected and beyond the Company’s controls. In addition, IGT mechanics
had professional expertise in the automotive repair and the Company received special
discounts from garages through IGT. Thus, the transactions were considered reasonable.
However, the Audit Committee emphasized that in the future the Company must coordinate
the vehicle repairs itself and assistance could be asked from IGT only for special discounts
which garages offered to IGT as a frequent customer. All future vehicle repair transactions
must be made in the name of the Company and paid directly by the Company. Thus, these
transactions will not recur in the future.
ANNUAL REPORT 2014
117
118
3. Passakornnatee
Co., Ltd. (PAS)
2.Japanese
Prime
Restaurants
Management
Co., Ltd.
(JPRM)
Outstanding
balance at
the end of the
accounting
period
0.46
-
0.37
-
-
0.00
Outstanding
balance at
the end of the
accounting
period
Hotel
accommodation
expenses
0.25
0.88
2014
Food and
beverage
2013
Transaction
The Audit Committee viewed that the transactions were beneficial to the Company given
the special discount of 50% offered to the Company for its PR events. The transactions were
considered beneficial, reasonable and in the normal course of business.
•Special discount of around 50% was offered.
•Expenses on hotel accommodation paid to PAS which operates Villa Maroc Resort in Pranburi
for room rentals under its PR events such as thank-you parties for members of the media.
Meals for the Company’s customers were paid by the Company for its own benefits and the prices
charged by JPRM were at the same rates applicable to other customers of JPRM. Thus, the Audit
Committee viewed that the transactions were reasonable and in the normal course of business.
•Meal expenses for the Company’s customers and the meal prices were at the same rates
applicable to other customers of JPRM.
-
-
30.00
(30.00)
0.14
-
94.93
-
Beginning balance
Increase during
the period
(Decrease) during
the period
Outstanding balance
at the end of the
accounting period
Interest expenses
Outstanding balance
at the end of the
accounting period
Proceeds from
sale of asset and
raw materials/
inventories
(divestment of food
business)
Outstanding
balance at the end
of the accounting
period
2014
4. Kin Kub Tan
Co., Ltd.
(KIN)
2013
Transaction
Related Party
Transaction
Value (MB)
•As food business comprises a small proportion of the Company’s revenue and net profits,
compared to beverage business, the Company sold its food business to KIN at Baht
94.79 million and transferred the assets (only operating assets of the food business) on
1 January 2013. However, the Company did not sell or transfer other assets and liabilities
of the food business due to certain legal obligations. The transfer of the remaining assets
and liabilities was subject to consent from all business partners. However, the Company
received and paid for all of the remaining assets and liabilities in the first quarter of 2013.
•The assets sold to KIN were equipment, furniture and fixtures at the restaurants (Melt Me
and Tokiya) and the central kitchen as well as raw materials and inventories according to
sale and purchase agreement dated 28 December 2012 between the Company and KIN
in a deal worth Baht 94.79 million (exclusive of VAT and withholding tax).
•Items sold to KIN, in addition to items under the said sale and purchase agreement,
included the employee uniforms worth Baht 0.14 million, thus increasing the deal value
to Baht 94.93 million in total. The Company recorded the net profit of Baht 66,699.50 from
the deal.
Since the Company’s main objective is to operate beverage business and the revenue and
net profit from the food business comprised a small proportion, compared to its beverage
business, the Company sold its food business to KIN. The Audit Committee viewed that
the transactions were reasonable and in the normal course of business operations.
•On 28 December 2012, the Company sought unsecured, callable P/N credits from KIN.
The debts were fully settled in February 2013.
•Interest rate was 4% p.a.
The Audit Committee viewed that the transactions were beneficial to the Company.
The credits resulted in the Company’s extra liquidity and were used as working capital.
The interest rate of 4% p.a. was lower than banks’ rates. Thus, the Audit Committee
concluded that the transactions were reasonable and in the normal course of business
operations.
ANNUAL REPORT 2014
119
120
5. Tan Asset
Co., Ltd.
(TAN)
4. Kin Kub Tan
Co., Ltd.
(KIN) (Cont.)
Outstanding
balance at
the end of the
accounting
period
0.20
0.20
-
Outstanding
balance at
the end of the
accounting
period
Expenses on
book purchase
0.21
0.23
-
0.43
0.03
0.05
-
0.18
2014
0.96
Raw materials
and equipment
Food and
beverage
Outstanding
balance at
the end of the
accounting
period
2013
Transaction
The Audit Committee viewed that the transactions were reasonable and beneficial to
the Company because the gifts helped promote the Company and the books were sold to
the Company at cost prices.
•The transactions were at cost prices.
•Purchase of the books titled “Wi Thee Mai Tan” and “Kam Tan” from TAN as gifts and goods for
sale at Melt Me shops and Tan Land, Rojana Industrial Park.
The Audit Committee viewed that the transactions were reasonable and beneficial to
the Company because the ice cream products were sold to general customers at a profit.
•The transactions were at cost prices.
•Purchase of ice cream and equipment for the sale of ice cream at Tan Land, Rojana Industrial
Park.
Meals for the Company’s customers were paid by the Company for its own benefits and the
prices charged by KIN were at the same rates applicable to other customers of KIN. Thus,
the Audit Committee viewed that the transactions were reasonable and in the normal course
of business.
•The meals were charged at the normal rate applied to other customers of KIN.
•Meals at KIN for customers of the Company.
(KRD)
7. Kin Rong
Deum Co.,
Ltd.
Entertainment
expenses
6. Ezili Co., Ltd.
(EZL)
Outstanding
balance at
the end of the
accounting
period
Outstanding
balance at
the end of the
accounting
period
Entertainment
expenses
Billboard rental
expenses
Outstanding
balance at
the end of the
accounting
period
5. Tan Asset
Co., Ltd.
(TAN)
0.12
-
-
-
-
-
0.02
0.03
-
0.02
0.24
2014
-
2013
Transaction
Meals for the Company’s customers were paid by the Company for its own benefits and the
prices charged by KRD were at the same rates applicable to other customers of KRD. Thus,
the Audit Committee viewed that the transactions were reasonable and in the normal course
of business.
•The transactions were charged at the same rates applicable to other customers of KRD.
•Meals at KRD for the Company’s customers.
The Audit Committee viewed that the transactions were at the same rates applicable to other
customers of EZL and thus were reasonable and in the normal course of business operations.
•Expenses on meals at EZL for the Company’s customers which were charged at the same
rates applicable to other customers of EZL.
The Audit Committee opined that the billboard advertisements contributed to brand
communication and promotion. The transactions were in the normal course of business
operation and were at a discounted. Thus, it was concluded that the transactions were beneficial
to the Company and reasonable.
•The billboard rental was 40% discounted.
•Promotion of the Company’s brands in accordance with the marketing plan.
ANNUAL REPORT 2014
121
122
-
Outstanding balance
at the end of the
accounting period
9. Mrs. Eng
Passakornnatee
-
Hotel accommodation
expense
8. Tan Boon
Co., Ltd.
(TANBOON)
Outstanding balance
at the end of the
accounting period
Interest expenses
-
53.40
(Decrease) during the 1,000.00
period
-
-
(270.00)
41.9
-
520.00
Increase during the
period
Outstanding balance
at the end of the
accounting period
-
750.00
-
-
0.00
2014
Beginning balance
2013
Transaction
Related Party
Transaction
Value (MB)
The Audit Committee viewed that the transactions were beneficial to the Company. The
credits resulted in the Company’s extra liquidity and were used as working capital. The
interest rate of 4% p.a. was lower than banks’ rates. Thus, the Audit Committee concluded
that the transactions were reasonable and in the normal course of business operations.
•In 2012, the interest rate was 5% p.a. and changed to 4% p.a. from Q2/2013 onwards. The
interest rate will be reviewed quarterly.
•The Company sought unsecured P/N credits from Mrs. Eng to be repaid on 30 June 2015.
The Audit Committee viewed that the transactions were beneficial to the Company given
the special discount offered to the Company for room rentals under its PR events. The
transactions were considered beneficial, reasonable and in the normal course of business.
•Special discount was offered.
•Expenses on hotel accommodation paid to TANBOON which operates Eastin Tan Hotel
in Chiangmai for promotional activities of the Company and its customers.
ANNUAL REPORT 2014
Necessity and Reasonableness of Transaction
Related-party transactions are carefully executed for the best interest of the Company and its shareholders.
All related-party transactions and transactions with conflicts of interest are in the Company’s normal
business operations, reasonable and necessary for the Company’s normal business. Terms and conditions
of such transactions are at an arm’s length basis and comparable to the markets or other similar customers.
Credit transactions between the Company and its related parties are executed only when necessary for
extra liquidity of the Company.
Related-Party Transaction Approval Procedure
The Company’s decisions to approve related-party transactions are primarily based on the Company’s
interest. Such transactions were escalated to relevant authorities, i.e. the Audit Committee, the Board
of Directors and the Company’s senior executives, in accordance with applicable approval procedures
to ensure that implications and pricing of the transactions are appropriate and at an arm’s length basis.
The Company has obtained approval for the guiding principles for transactions at an arm’s length between
the Company and its directors, executives and related parties. According to the approved principles, the
Company may enter into related-party transactions, subject to the approval by the management team,
if the transactions have the same commercial terms and those an ordinary persons would agree with another
party under similar circumstances and on the basis of commercial negotiation which is not influenced
by their status as director, executive or related party. The related-party transaction report is presented to
the Audit Committee on a quarterly basis.
Directors, members of the Executive Committee and persons with potential conflict of interest do not
have the authority to approve transactions concerned in order to comply with the requirements and rules
stipulated by the SEC and/or the SET.
Any related-party transactions which are beyond the scope of expertise of the Audit Committee shall
be escalated to independent experts for opinions to support the consideration of and decision on such
transactions by the Board, the Audit Committee or shareholders as applicable.
Material related-party transactions are disclosed under the notes to the financial statements which have
been audited by the Company’s auditor.
Related-Party Transaction Policy and Future Trend
It is the Company’s policy that all related-party transactions during the present time and in the future
must be on an arm’s length basis, reviewed in accordance with the corporate governance principles, the
Company’s rules and approved by relevant authorities as specified in 3) above to promote transparency
and fairness.
123
Summary of Key Contract/Agreement
1. Distributor Agreement
On 20 June 2014, the Company entered into a distributor agreement with I Am Green Tea Co., Ltd. (IGT)
to appoint IGT as the Company’s distributor. The agreement is valid from 1 July 2014 to 30 June 2017.
Parties to Agreement
: I Am Green Tea Co., Ltd (“the distributor”) and the Company
(“the manufacturer”)
Date of Agreement
: 20 June 2014
Effective Date
: 1 July 2014
Validity Period
: 3 years (1 July 2014 – 30 June 2017)
Territory
: The manufacturer agrees that the distributor can distribute its
beverage products in Thailand according to the agreed terms and
conditions through all channels, except for the modern trade channel.
Pricing and Payment Terms
: The distributors must purchase products from the manufacturer at
the selling prices determined by the manufacturer as of the date such
products are sold to customers. The manufacturer will issue invoices
at the selling prices indicated in the agreement. The distributor
shall sell products to shops and merchants according to the pricing
structure specified by the manufacturer in the agreement.
Distribution Center and Delivery : The distributor shall ensure that it has sufficient warehouse space
of Goods to Distribution Center
for storage of the products delivered to the distributor by the
manufacturer.
: The manufacturer shall deliver products to distribution centers as
specified in the 30-day advance notice of the distributor. The delivery
costs and expenses shall be borne by the manufacturer.
Product Ownership
: Products stored at distribution centers are owned by the distributor.
Marketing and Promotion
: The expenses shall be borne by the manufacturer.
Expenses
Expenses on Product Recall
: Recall caused by the manufacturer’s error: The manufacturer shall
be responsible for the costs and expenses associated with the recall
of defective products.
: Recall caused by product defects: The manufacturer agrees to be
responsible for and pay compensation to the distributor at the agreed
prices.
: Recall caused by the distributor’s error: The manufacturer shall not
be responsible for such recall.
Agreement Cancellation
: The agreement cancellation may be initiated on a reasonable ground
in the following circumstances by a party to the agreement which
does not breach the agreement:
124
ANNUAL REPORT 2014
1) Either party to the agreement is in solvency, bankruptcy, business
dissolution or liquidation.
2) Either party to the agreement breaches this agreement or fails to
honor obligations under this agreement within 30 days from the
receipt of notice thereof from another party.
Responsibility for Damage : The manufacturer must provide clear and sufficient usage and care
Caused by Unsafe Product
instructions, warnings and production information. The manufacturer
shall be solely responsible for damage caused by unsafe products
and protect the distributor from damage associated with claims,
litigation, accusation and fine penalties caused by unsafe products.
Confidentiality
: Confidential information shall continue to be protected 3 years
following the agreement termination or cancellation.
2. License Agreement for Production and Distribution of Products with Mr. Tan Passakornnatee’s
Pictures, Drawings, Symbols and Work of Design
Parties to Agreement
: Mr. Tan Passakornnatee (“the licensor” or “Mr. Tan”) and I Am Green
Tea Co., Ltd (“the licensee”) (formerly Ichitan Trading Co., Ltd.)
Date of Agreement
: 1 July 2011
Effective Date
: 1 July 2011
Validity Period
: 5 years (1 July 2011 – 30 June 2016)
License Fee
: Waiver of fees and charges for the licensee under this agreement.
Manufacturing and Distribution : The figurine and goods with pictures, symbol or works of design of
of Product
the licensors must be manufactured by the licensee or a manufacturer
hired by the licensee for products which are suitable with such figurine
or goods at the licensee’s expense.
Selling Price
: The licensor reserves the right to determine the prices of such goods
whereas the licensee is authorized to mark up the prices by 10%
at a maximum as management fee.
Duty of Licensee
: The licensee does not have the right to transfer or assign its rights
and obligations under this agreement, either partially or entirely, to
a third party unless otherwise permitted in writing by the licensor.
Agreement Cancellation
: Where the licensee breaches any provision under this agreement
or attempts to exploit rights under this agreement for any purpose
other than those stated in this agreement, the licensor shall have the
right to immediately cancel this agreement by submitting a written
to notice via registered mail. Upon the termination of this agreement
due to any cause whatsoever, the rights granted to the licensee under
this agreement shall be terminated and void.
125
126
ID, AC
ID, AC
ID, //
D D D D D D
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
C, CEO, MD D D D D D D D D D D D
D
D, ED, M D D D D D D D D D D D
D
D D D D D D D D D D D D D D
D, M
D
D
D, ED
D
D
ED, M
D, ED, M
D, ED, M
Related Companies
17 = ACAP ADVISORY PLC.
17 = Acap Consulting Co.,Ltd.
18 = Global Service Center Co., Ltd.
7 = Tan And Tan Asset Co.,Ltd.
8 = Deaw Deaw Kab Tan Co.,Ltd.
9 = Gluay Gluay Co.,Ltd.
27 = The Classic Studio Co.,Ltd.
26 = Victoria’s Wedding Professional Co.,Ltd.
25 = Modern Wedding Studio Co.,Ltd.
23 = My Memory Studio Co.,Ltd.
24 = Your Studio Co.,Ltd.
15 = Professional Collection Co.,Ltd.
22 = Tokiya Co.,Ltd.
5 = Japanese Prime Restaurants Management Co.,Ltd. 14 = Capital OK Co.,Ltd.
13 = Wedding Business Consultant Co.,Ltd.
4 = Tan Boon Co.,Ltd.
20 = Thank You Service Co.,Ltd.
21 = T.Y. Marriage Studio Co.,Ltd.
6 = DST Asset Co.,Ltd.
11 = Ichi Pang Co.,Ltd.
12 = Lopburi Inn Plaza Co.,Ltd.
2 = Tan And Tan Sriracha Asset Co.,Ltd.
3 = Eng Tan Asset Co.,Ltd.
10 = Passakornnatee Co.,Ltd.
1 = Eng And Eng Sriracha Asset Co.,Ltd.
19 = ACAP Corporate Services Co.,Ltd
33 = Tan Eng Asset Co.,Ltd.
32 = Kin Kab Tan Co.,Ltd.
31 = Mu Tiare Weddind Gown & Planner Co.,Ltd.
30 = Marry Me Wedding Studio Co.,Ltd.
29 = Beloved Studio Co.,Ltd.
28 = White Marry Studio Co.,Ltd.
C = Chairman D = Director ID = Independent Director // = Chairman of the Audit Committee AC = Audit Committee CEO = CHAIRMAN OF EXECUTIVE COMMITTEE ED = Executive Director MD = Managing Director M = Management
List of companies
Remark:
Mr. Viroj Supasoon
AVM. Nathawat
Nimmolthanakhorn
Mr. Prasan Limpipatanakul
Mr. Chiu Yueh-Chin
Miss. Araya Panichayanon
Name
The
Company
Details of office of directors and executive officers of the Company. In subsidiaries and related companies
ANNUAL REPORT 2014
Management Discussion and
Analysis
Analysis of Operating Results
Revenue
In 2012-2014, the Company recorded the revenues of Baht 4,482.9 million, Baht 6,531.8 million and
Baht 6,208.9 million respectively, while the sales revenues were Baht 3,906.8 million, Baht 6,484.4 million
and Baht 6,179.1 million. The YOY growth rates of 2012-2014 were 269.7%, 66.0% and (4.7)%, respectively.
In 2014, the sales revenue of the Company declined by 4.7% from the previous year due to the
prolonged cool weather which continued into the first 2 months of the year and the subdued ready-to-drink
tea market.
The 2011 sales performance reflected the adverse impact of the great flood. However, the Company’s
factory resumed normal production in 2012 and the Company introduced new 7 flavors to the market
and launched aggressive promotional campaigns to increase our market share. In addition, the brand
recognition of Ichitan started to gain ground among the public and our distribution network was expanded
and strengthened. In early 2013, the Company launched Yen Yen product which received good feedback
from customers and greatly contributed to our rapid market share growth.
In 2011-2013, sales revenues were mainly from Ichitan green tea product before herbal drink
products started to general sales revenue in 2014. Percentage of sales from modern trade and traditional
trade was nearly equal.
In 2014, sales revenues were from ready-to-drink tea and the Company launched Ichitan Selected,
a low sugar tea drink product, Ichitan Dragon Black Tea (mulberry flavor), and Yen Yen by Ichitan,
a honey-mixed chrysanthemum drink.
Other revenues included FX gains from machinery imports which stood at Baht 52.8 million,
Baht 41.0 million and Baht 8.3 million in 2012-2014 respectively. In 2014, the Company additionally recorded
the interest income of Baht 9.4 million and the marketing fee of Baht 8.0 million.
Revenue Structure
Net sales revenue
Net revenue from flood
Other revenue
Total revenue
Sales growth
Market share*
No. of flavors
2012
MB
3,906.8
518.8
57.3
4,482.9
%
87.1%
11.6%
1.3%
100.0%
269.7%
27.1%
16 รสชาติ
2013
MB
6,484.4
47.5
6,531.8
%
99.3%
0.7%
100.0%
66.0%
42.1%
2014
MB
6,179.1
29.8
6,208.9
%
99.5%
0.5%
100.0%
(4.7%)
43.8%
Source: * Retail Index of Nielsen, January 2014
127
Cost of Sales
In 2012-2014, the cost of sales was primarily from raw materials and supplies which accounted
for 90% of the total cost of goods sold.
Cost of Sales
2012
MB
Raw materials, supplies and changes in 2,504.3
inventories of finished goods
Depreciation and amortization
133.1
Utility expenses (fuel, gas, electricity
79.1
and water)
Transportation cost
46.0
Employee expenses
42.8
Share-based payment
14.4
Other
46.5
Total
2,866.1
Sales revenue (MB)
Gross profit margin (%)
2013
2014
%
87.4%
MB
3,766.5
%
85.1%
MB
3,235.3
%
79.6%
4.6%
2.8%
256.2
161.6
5.8%
3.6%
358.5
203.9
8.8%
5.0%
1.6%
1.5%
0.5%
1.6%
100.0%
3,906.8
26.6%
61.6
76.0
2.9
100.7
4,425.0
1.4%
1.7%
0.1%
2.3%
100.0%
6,484.4
31.8%
43.7
102.8
121.0
4,065.2
1.1%
2.5%
3.0%
100%
6,179.1
34.2%
In 2012 – 2014, the Company’s gross profit margins of beverage business were 26.6%, 31.8%
and 34.2%, respectively. The 2012 gross profit margin was rather low because the in-house production line
was not fully operational and the Company had to outsource 47% of its production activities to OEM, hence
the higher unit cost and lower gross profit margin. In 2014, the Company’s production capacity increased
and thus it gradually reduced dependency on OEM to 9% of the total production volume. This contributed
to the Company’s improved performance in terms of unit cost and gross profit margin as evident in the
2014 gross profit margin which increased to 34.2% from the same period of the previous year as a result
of a new production line for bottle type which started operation in April 2014, coupled with the decrease
in the OEM to 9% of the total production volume. The use of OEM was expected to continuously decline,
especially following the completion of construction and machinery installation under phase 2 of the
production capacity increase project in April 2015.
Share-based payment resulted from the personal share purchase and sale agreement between
a major shareholder and employees of Ichitan and the stock option offered by a major shareholder to
a group of business partners at par value. Such transactions were classified and recorded as share-based
payment transactions and were subject to the fair valuation.
128
ANNUAL REPORT 2014
Share-Based Payment
Share-based payment (employee) – Cost of sales
Share-based payment (employee)
– Administrative expense
Share-based payment (business partner)
– Administrative expense
Total
2012
2013
2014
14.4
2.9
-
5.9
6.6
-
23.0
3.2
-
43.3
12.8
-
Selling Expenses
Major selling expenses primarily include advertisement and promotional expenses. The selling
expenses were Baht 531.5 million in 2012, Baht 931.2 million in 2013 and Baht 774.2 million in 2014 and the
ratios of selling expenses to sales revenue in each of the aforesaid years were 13.6%, 14.4% and 12.5%,
respectively. The decline was attributed to the Company’s plan to strictly control marketing and promotional
expenses within the level of 14% of the sales revenue through cost-effective and efficient marketing tools.
The management has reviewed the marketing and promotional strategies every quarter to ensure that
they are appropriate for the prevailing market conditions.
In 2014, selling expenses amounted to Baht 774.2 million, accounting for 12.5% of the sales revenue,
decreasing from 14.4% of the previous year because the Company organize only 1 major promotional event
in 2014 and strictly curbed its selling expenses.
Administrative Expense
In 2012-2014, administrative expenses mainly included expenses on staff, education, sports
and charities which altogether accounted for approximately 65.0% of the total administrative expenses.
The administrative expenses were Baht 134.9 million in 2012, Baht 130.3 million in 2013 and Baht 250.4
million in 2014.
In 2014, administrative expenses totaled Baht 250.4 million, increasing Baht 120.1 million or 92.1%
from the previous year mainly due to the recognition of the impairment loss worth Baht 121.5 million for
the trademark right, divided into Baht 84.1 million in the “intangible asset” account and Baht 37.4 million
in the “advance payment for trademark right” account.
As of 31 December 2014, the Company registered the transfer of trademarks in 10 countries
(Thailand, Cambodia, India, Myanmar, the Philippines, Singapore, Hong Kong, South Korea, Taiwan and
Vietnam) which were recognized as intangible assets with the total value (before tax) of Baht 168.22 million.
Trademarks in 4 countries (China, Malaysia, USA and Canada) are still pending the ownership transfer
registration and were recorded as advance payment for trademark right of Baht 37.38 million (before
tax). However, the Company has not yet finalized its plan to sell “Bireley’s” products in these countries,
except for Thailand, and thus a realistic cash inflow projection associated with such products cannot yet
be made. In this connection, to comply with the Accounting Standard No. 36 on Impairment of Assets
and the Accounting Standard No. 38 on Intangible Assets which stipulate that an impairment test must
be performed annually for intangible assets with indefinite useful life to identify their recoverable amount
at the same time every year, the Company has set aside the impairment allowance totaling Baht 121.49
million for the year ended 2014.
129
Profit (Loss) Before Financing Cost and Income Tax
If the impact of the great flood and the performance of businesses halted is not factored in, the
Company’s profit before financing cost and income tax stood at Baht 431.6 million in 2012 and Baht 1,045.3
million in 2013, or 9.6% and 15.4% of the total revenues in 2012 and 2013 respectively. The Company’s
factory commenced operation in March 2012 with 1 production line for bottle type and 1 production line
for box type. The production capacity was increased in the third quarter of 2012 to 2 production lines for
bottle type and 2 production lines for box type. The production capacity increase coupled with the reduction
in OEM production contributed to lower unit cost and higher profit margin.
In 2014, the Company’s profit before financing cost and income tax was Baht 1,119.1 million,
accounting for 18.0% of the total revenue and Baht 73.8 million higher than the same period of the previous
year. The growth was attributed to a new production line for bottle type in April 2014, the “Ruay Prieng 3”
promotional campaign launched in March 2014, and the launch of a new product, Yen Yen, a honey-mixed
chrysanthemum drink, in August which received good response from consumers.
Comprehensive Profit (Loss)
The Company’s comprehensive income (loss) was Baht 697.7 million in 2012, Baht 881.7 million
in 2013 and Baht 1,061.2 million in 2014, representing the net profit margin ratio of 15.6%, 13.5% and 17.1%
respectively. The operating profit margins of 2012-2014 were 6.8%, 13.5% and 17.5% of the total revenue.
Analysis of Financial Position
Asset – Continuing Operation
As of 31 December of 2012-2014, the Company’s total assets stood at Baht 5,371.0 million,
Baht 6,540.9 million and Baht 9,026.2 million, respectively. As the Company operates beverage production
and distribution businesses, its core assets include machinery, factory equipment, land and buildings
which altogether account for 75.3% of the total assets as of 21 December 2014.
In the previous year, the Company saw growth in its total assets due to its capacity increase
initiatives, driven by its expansion into overseas markets and OEM reduction and, including the increase
in current assets on the back of business growth, and the IPO launch. Key transactions which contributed
to the asset growth of Baht 2,485.2 million were:
1. Net increase of Baht 1,813.3 million in property, plant and equipment, mainly from machinery investment
in the production line for bottle type.
2. Increase of Baht 100.7 million in accounts receivable on the back of business growth. The Company
recorded the sales growth of 66.0% in 2013 and (4.7)% in 2014. Our credit term is 30-45 days while
the average collection period ranges from 32-50 days, i.e.32 days in 2012, 36 days in 2013 and 50 days
in 2014. The average collection period of 2014 was longer than that of 2013 because the collection period
was extended for a key distributor in accordance with the terms and conditions under a distribution
agreement.
130
ANNUAL REPORT 2014
Major accounts receivable of the Company are distributors who are granted the credit term of
30-45 days. Details of accounts receivable as of the end of 2012-2014
Aging
Related Party
Undue
Overdue
• Less than 3 months
• Longer than 6 months
Total
Third Party
Undue
• Overdue
• Less than 3 months
• Longer than 6 months
Total
Grand Total
2012*
MB
2013
2014
%
MB
%
MB
%
5.1
1.1%
206.9
25.6%
38.2
4.2%
1.1
0.0
6.2
0.2%
0.0%
1.3%
206.9
25.6%
38.2
4.2%
444.2
95.6%
602.0
74.4%
870.7
95.7%
14.4
0.0
458.6
464.8
3.1%
0.0%
98.7%
100.0%
0.1
.0%
74.4%
100.0%
0.7
0.1%
95.8%
100.0%
602.0
809.0
871.4
909.6
Remark: * Accounts receivable of 2012 included accounts receivable worth Baht 4.8 million from discontinued business (food business)
3. Increase of Baht 337.5 million in inventories in line with the business growth. The Company adopts
the 30-day policy for its inventory stocking. The inventory turnover rates were 15.8x in 2012, 17.0x
in 2013 and 13.3x in 2014 while the average holding periods in 2012-2014 were 23 days, 21 days and
27 days, respectively. The return on assets declined to 15.0% in 2013 and 14.0% in 2014 and the return on fixed assets
decreased from 25.8% in 2013 to 24.6% in 2014 due to extra machinery investment in phase 2 of the capacity
increase project which is partially pending installation and not operative in 2014. The machinery installation
will be fully completed in the second quarter of 2015.
Liability – Continuing Operation
As of 31 December of 2012-2014, the Company’s liabilities totaled Baht 4,224.0 million, Baht 4,572.6
million and Baht 2,813.3 million, respectively, most of which are bank loans. The outstanding of bank loans
as of 31 December 2014 amounted to Baht 1,962.5 million.
Long-term bank loans by maturity:
– Loans due for repayment in 1 year: Baht 182.0 million.
– oans due for repayment in 1-5 years: Baht 1,672.7 million.
– Loan due for repayment in 5 years and longer: Baht 107.8 million.
131
Financing Structure
The Company’s major source of funds of are bank loans and director loans. As of 31 December
2013 and 31 December 2014, the debt to equity ratios of continuing business of the Company stood at 2.3x
and 0.5x respectively. The debt to equity ratios of the Company computed according to the requirements of
lending banks (where equity includes loans from directors and related companies and debts excludes the
same) were 1.2x as of 31 December 2013 and 0.5x as of 31 December 2014. The debt to equity ratios met
the lending banks’ financial covenant requirement which stipulates that the Company’s debt to equity ratio
must not exceed 2.5x. The debt to equity ratio of 2014 improved as a result of the repayment of director
loans and bank loans in April 2014 from IPO proceeds.
Liabilities and Contingencies as of 31 December 2014
– Capital commitment worth Baht 307.7 million from the acquisition of properties, plants and
equipment.
– Operating lease commitment worth Baht 19.5 million from the office building and facilities
lease agreements of which terms range from 1-4 years and end in 2014-2016.
– Commitment worth Baht 369.3 million according to the undrawn L/C facilities.
– Commitment worth Baht 57.3 million under purchase orders agreed with suppliers of goods
and materials.
– Commitment worth Baht 5.5 million under guarantee issued by a bank to a state enterprise.
Shareholders’ Equity
As of 31 December 2014, the shareholders’ equity was worth Baht 6,212.9 million, divided in
the paid-up registered capital of Baht 1,300 million, the premium on ordinary shares of Baht 3,515.4 million,
the surplus on share-based payment of Baht 56.1 million, the legal reserve of Baht 130.0 million and the
retained earnings of 1,211 million.
In 2013, the shareholders’ equity was worth Baht 1,968.3 million, divided in the paid-up registered
capital of Baht 1,000 million, the surplus on share-based payment of Baht 56.1 million, the legal reserve of
Baht 45.0 million and the retained earnings of Baht 867.2 million. From the inception to this point of time,
the Company has never paid dividends to shareholders.
In 2012, the shareholders’ equity was worth Baht 1,073.9 million, up Baht 1,141.0 million from 2011
as a result of the registered capital increase of Baht 400 million. The profit from normal operation of the
beverage business was Baht 306.4 million and the remaining insurance claim of Baht 569.4 million was
recognized.
The return on equity ratios in 2013 and 2014 were 66.7% and 26.4%, respectively.
Book Value Per Share
132
As of 31 December 2014, the Company’s book value was Baht 4.62 per share.
ANNUAL REPORT 2014
Liquidity Analysis and Source and Use of Fund
In 2014, the Company’s main sources of fund were operating cash flow, bank loan and IPO proceeds.
Operating Cash Flow
In 2014, the Company recorded the operating cash flow of Baht 1,472.8 million from sales and
operating profit.
Liquidity Ratio
The Company’s liquidity mainly depended on the efficiency of inventory turnover management,
collection of accounts, cash flow from collection of accounts receivable and payment to accounts payable.
In 2012-2014, the
Liquidity ratio
Average collection period
Inventory turnover
Account payable turnover
Cash cycle
Unit
วัน
วัน
วัน
วัน
2012
31.7
22.8
36.3
18.2
2013
35.2
21.2
28.9
27.6
2014
50.1
27.0
35.8
41.3
In 2014, the average collection period lengthened from 35.2 days in 2013 to 50.1 days due to
the extension of the collection period for a key trading partner from 30 days to 45 days in accordance with
the terms and conditions of applicable agreement. In this regard, the Company requested its raw material
suppliers to change the credit terms to 45 days and this led to the longer account payable turnover.
In 2014, the cash cycle increased to 41.3 days from 27.6 days in 2013 as a result of the extension
of the collection period for a key distributor. As the average collection period and the account payable
turnover were extended by 14.9 days and 6.9 days, respectively, the cash cycle was lengthened by
13.7 days.
Debt Service Coverage Ratio
According to the lending banks’ requirement, the Company must maintain the debt service
coverage ratio of at least 1.25x and the debt to equity ratio of 2.5x or lower. As of 31 December 2013 and
2014, the Company’s debt service coverage ratios stood at 3.3x and 5.9x, respectively while its debt to
equity ratios were 1.2x and 0.5x, respectively.
Cash Flow from Investing Activity
In 2014, the Company’s net cash flow from investing activity stood at Baht (2,475.2) million.
Key investing activities were land acquisition, construction costs, purchase of machinery and equipment,
acquisition of trademark rights and investment in jointly-controlled entities.
133
Cash Flow from Financing Activity
In 2014, the Company’s net cash flow from financing activity amounted to Baht 1,070.5 million,
primarily from bank loan and IPO proceeds. The said cash flow was used for land acquisition, construction,
purchase of machinery and equipment, loan repayment, dividend payment and working capital.
Audit Fee
In 2014, the audit fee paid to KPMG Phoomchai Audit Limited amounted to Baht 1.8 million.
Factor and Influence Potentially Affecting Performance or Financial Position in the Future
Major Factor Affecting the Company’s Performance
1) Major incidents affecting past performance
In 2014, the Company installed a new production line for bottle type which increased its production
capacity as of 31 December 2014 to 6 production lines, of which 4 are for bottle type and 2 are for box type.
Launch of new product and market share expansion
Price competition in the beverage market has been rather fierce as there are several players in
the market, especially the ready-to-drink market. Most players have adopted aggressive strategy and
continuously introduced promotional campaigns to the market. Development of value-added products
and product differentiation have been key focus of beverage business operators as evident in the number
of new ready-to-drink products which has consistently grown since mid-2012. Therefore, it is vital for the
Company to continuously develop new products which can cater to the growing needs and demands of
consumer in order to sharpen its competitive edge, protect its market share and prevent against negative
impact on its performance.
The Company has formulated a product research and development roadmap and a dynamic sales
strategy to effectively respond to changes in the market landscape as well as to attract new customers
and retain existing customers which ultimately will lead to our higher market share. In the past 4 years,
the Company has introduced 19 products to the market.
2) Sales forecast, production planning and effective cost and expense management
Most of the Company’s production costs are fixed costs, i.e. machinery depreciation and land
lease. Given the fact that the unit cost decreases as output increases, the Company needs to forecast its
sales performance to optimize the effectiveness of its production planning, raw material procurement and
product distribution.
Key factors affecting demand and consumption are weather and promotional activities. The rate of
ready-to-drink tea consumption hikes in summer and slows in winter. Therefore, it is imperative for the
Company to seasonally adjust its promotional strategy to match the changing demand levels of consumers.
For effective cost and expense management, the Company has applied advanced technology to
its production process as well as controlled its production costs. In addition, the Company has reviewed
its resource utilization such as staffing and amount of raw material used to ensure cost-effectiveness and
determine appropriate unit cost.
134
ANNUAL REPORT 2014
Report of the Audit Committee
Dear Shareholders
The Audit Committee consists 3 independent directors, namely AVM Nathawat Nimmolthanakhorn, as the
Chairman of the Audit Committee, Mr. Prasan Limpipatanakul and Mr. Issarachai Decharit. All members of the Audit
Committee meet the qualification criteria under the Audit Committee’s charter which has been formulated under
the requirements and best practices applicable to audit committees as stipulated by the Securities and Exchange
Commission and the Stock Exchange of Thailand.
In 2014, the Audit Committee held 5 meetings and performed duties with independence and in accordance
with the scope of authority and responsibilities as summarized below:
• Review of financial reports and disclosures in collaboration with the auditors and the management responsible
for quarterly and annual financial reports to ensure the adequacy and adequacy thereof. Review of the Company’s
internal control systems jointly with the auditor and the internal auditor team to ensure that the Company’s
internal control and internal audit were adequate and appropriate.
• Oversight and evaluation of the internal audit team’s performance in view of the annual internal audit plan and
manpower to promote the independence of the internal audit function.
• Nomination of the 2015 auditor of the Company to the Board following the joint review of the auditor’s profile,
proven track records and the auditor’s fee in collaboration with the management. Review of the qualifications
and independence of the auditors in compliance with applicable requirements of the Securities and Exchange
Commission and the Stock Exchange of Thailand. In this regard, the Audit Committee proposed to the Board the
nomination of Mrs. Munchupa Singsuksawat from KPMG Phoomchai Audit Limited as the Company’s auditor
for 2014 and the auditor’s fee which shall be further proposed to the shareholders’ meeting.
• Oversight of the Company’s compliance with the corporate governance principles, the Securities and Exchange
Act, requirements stipulated by the Stock Exchange of Thailand or legal and regulatory requirements applicable
to the Company’s business. Review of related-party transactions and potential conflicts of interest to ensure the
Company’s proper and reasonable compliance with regulatory requirements and rules for the Company’s best
interest as well as the management’s strict compliance with the related-party transaction policies approved
by the Board.
• Proposal of the reviewed Audit Committee’s charter to the Board which had been revised according to the
changing business environment of the Company. Self-evaluation of the Audit Committee’s performance to
identify achievements, issues and areas for improvement of the Audit Committee and other relevant units.
Participation in relevant training courses and seminars to enhance knowledge related to roles and responsibilities
of audit committees.
The Audit Committee concurs with the auditor that the Company’s 2014 financial statements have been
prepared in accordance with applicable financial reporting standards. Disclosures have been adequately made
by the Company and its internal control system is satisfactory and presents no material weakness. The Company
has complied with applicable statutory and regulatory requirements and the management team has committed to
adhering to the principles of integrity and business ethics. The internal audit results have been directly reported
by the internal audit team to the Audit Committee and rectifications per the Audit Committee’s recommendations
have been regularly monitored.
AVM Nathawat Nimmolthanakhorn
Chairman of the Audit Committee
135
Report of the Nomination and
Dear Shareholders
The Nomination and Remuneration Committee of Ichitan Public Company Limited is appointed by
the Board Meeting No. 3/2014 dated 13 August 2014 and is comprised of 3 members as follows:
1. Mr. Issarachai 2. Mr. Prasan 3. Mrs. Eng Decharit Limpipatanakul Passakornnatee Chairman of Nomination and Remuneration Committee
The Nomination and Remuneration Committee has performed duties as assigned by the Board and in
accordance with the charter of the Nomination and Remuneration Committee. The key responsibilities of the
Nomination and Remuneration Committee include the nomination of qualified candidates as members of the Board
and Board Committees and the proposal of remuneration of the Chairman of the Board and the Chief Executive
Officer to the Board. In 2014, the Nomination and Remuneration Committee held 2 meetings.
The Nomination and Remuneration Committee has clearly formulated applicable policies, criteria and
procedures in accordance with the charters and regulatory requirements to provide appropriate operating frameworks
for the Company as approved by the Board as follows:
• The nomination of qualified candidates as members of the Board and Board Committees and the Chief Executive
Officer shall be based on qualifications, knowledge, abilities, skills, experiences, expertise, leadership, vision
and attitudes. Considerations are also given to the size, structure and composition of the Board to promote
the compliance with good corporate governance principles and effective management which are appropriate
to the evolving business environment and regulatory changes.
• The determination of remuneration offered to directors and the Chief Executive Officer is based on the scope of
responsibilities, duties and performance of the incumbents together with the operating results, business conditions
and factors which may affect the Company’s businesses and the economic conditions.
As of 31 December 2014, the Board is comprised of 9 members, of which 3 are independent directors.
The Nomination and Remuneration Committee has requested the directors conduct self-evaluation to review their
performance in the prior year. Details of the remunerations offered to directors and executives are shown under the
remuneration of directors and executives section of the annual report. The Nomination and Remuneration Committee
views that the remunerations are appropriate in view of with the scope of responsibilities of the directors and
executives and in accordance with the policies and criteria set by the Nomination and Remuneration Committee
and approved by the Board.
136
Chairman of Nomination and
ANNUAL REPORT 2014
Report of the Board of Directors’
Responsibility for the Financial
Reporting
According to the Public Limited Companies Act B.E. 2535, the Accounting Act B.E. 2543, the Securities
and Exchange Act B.E. 2535 and the Capital Market Supervisory Board’s Notification Re: Criterial, Conditions and
Procedures for Disclosure of Financial Positions and Performance of Securities Issuers, the Board is required to
ensure that the financial statements of the Company are properly prepared to accurately and reasonably disclose
its financial positions, performance, changes in the equity and cash flows in the prior year.
The Board of Directors of Ichitan Group Public Company Limited is responsible for the Company’s financial
statements and financial information disclosed in the annual report. The financial statements are prepared in
accordance with accounting standards generally accepted in Thailand which are primarily in line with international
standards and are based on appropriate accounting policies that are applied on a consistent basis. The financial
statements are also prepared with the use of appropriate estimates and judgments. Material information is adequately
disclosed in the notes to the financial statements together with the management discussion and analysis in order
to facilitate understanding of all shareholders and stakeholders about the Company’s overall financial position.
The Board has undertaken steps to ensure the effectiveness of the Company’s internal controls with a view
to provide reasonable assurance that the accounting records are accurate, complete and adequate for effective
safeguard of assets and identification of vulnerabilities and weaknesses to prevent against frauds and material
irregularities and errors.
The Board has appointed the Audit Committee which is comprised of non-executive, independent directors
to conduct a qualitative review of the Company’s financial reports and internal controls. The opinions of the Audit
Committee on these matters are under the Audit Committee’s Report section of this annual report.
The Board is of the view that the Company’s overall internal controls are satisfactory and can provide
reasonable confidence in the reliability of the Company’s financial system and that the financial statements as
of 31 December 2014 of the Company are in accordance the accounting standards generally accepted in Thailand
and applicable laws and notifications.
137
Financial statements for the year ended
31 December 2014
and
Independent Auditor’s Report
Annual Report 2014
Independent Auditor’s Report
To the Shareholders of Ichitan Group Public Company Limited
I have audited the accompanying financial statements in which the equity method is applied and separate
financial statements of Ichitan Group Public Company Limited (the “Company”), which comprise the
statement of financial position in which the equity method is applied and separate statement of financial
position as at 31 December 2014, the related statements of comprehensive income, changes in equity and
cash flows for the year then ended, and notes, comprising a summary of significant accounting policies
and other explanatory information.
Management’s Responsibility for the Financial Statements in which the Equity Method is
Applied and Separate Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in which
the equity method is applied and separate financial statements in accordance with Thai Financial Reporting
Standards, and for such internal control as management determines is necessary to enable the preparation
of financial statements in which the equity method is applied and separate financial statements that are
free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
My responsibility is to express an opinion on these financial statements in which the equity method is
applied and separate financial statements based on my audit. I conducted my audit in accordance with
Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the financial statements in which the
equity method is applied and separate financial statements are free from material misstatement.
139
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my
audit opinion.
Opinion
In my opinion, the financial statements in which the equity method is applied and separate financial
statements present fairly, in all material respects, the financial position of the Company as at 31 December
2014 and its financial performance and cash flows for the year then ended in accordance with Thai Financial
Reporting Standards.
(Munchupa Singsuksawat)
Certified Public Accountant
Registration No. 6112
KPMG Phoomchai Audit Ltd.
Bangkok
25 February 2015
140
Annual Report 2014
Statement of financial position
Financial
statements
in which the
equity method
is applied
31 December
Assets
Current assets
Cash and cash equivalents
Trade accounts receivable
Other receivables
Refundable value added tax
Inventories
Other current assets
Total current assets
Current assets
Cash and cash equivalents entity
Advances for purchase of machinery
and equipment
Advances for purchase of right
to use trademark
Property, plant and equipment
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Separate
financial statements
31 December
Note
2014
5
4, 6
7
151,787,255
909,636,298
77,716,093
88,310,030
675,902,595
12,326,010
1,915,678,281
151,787,255
909,636,298
77,716,093
88,310,030
675,902,595
12,326,010
1,915,678,281
83,655,341
808,969,969
98,510,229
93,003,483
338,450,088
11,237,387
1,433,826,497
117,683,141
135,620,414
-
30,578,290
30,578,290
120,452,693
6,795,180,663
86,573,463
59,487,245
3,052,429
7,092,555,231
6,795,180,663
86,573,463
59,487,245
3,052,429
7,110,492,504
4,981,921,606
2,517,509
2,217,429
5,107,109,237
9,008,233,512
9,026,170,785
6,540,935,734
8
9
11
10
11
12
2014
(in Baht)
2013
The accompanying notes are an integral part of these financial statements.
141
Financial
statements
in which the
equity method
is applied
31 December
Liabilities and equity
Current liabilities
Short-term loans from financial
institutions
Trade accounts payable
Other payables
Payables on purchase of property,
plant and equipment
Accrued expenses
Current portion of long-term loans
from financial institutions
Other current liabilities
Total current liabilities
Note
13
14
2014
Separate
31 December
2014
(in Baht)
28,224,000
519,324,591
24,723,033
28,224,000
519,324,591
24,723,033
355,825,857
288,858,239
23,520,841
101,357,939
186,399,592
101,357,939
186,399,592
165,310,609
140,809,801
153,840,796
8,032,453
1,021,902,404
153,840,796
8,032,453
1,021,902,404
230,805,263
8,881,150
1,214,011,760
Non-current liabilities
Long-term loans from financial
institutions
13
Long-term loans from related parties 4, 13
Employee benefit obligations
15
Total non-current liabilities
1,780,437,180
10,960,402
1,791,397,582
1,780,437,180
10,960,402
1,791,397,582
2,350,929,857
1,000,000,000
7,681,006
3,358,610,863
Total liabilities
2,813,299,986
2,813,299,986
4,572,622,623
4
13
142
2013
Annual Report 2014
Financial
statements
in which the
equity method
is applied
31 December
Liabilities and equity (continued)
Equity
Share capital
Authorised share capital
Issued and paid-up share capital
Additional paid in capital
Premium on ordinary shares
Surplus on share-based payment
transactions
Retained earnings
Appropriated
Legal reserve
Unappropriated
Other components of equity
Total equity
Total liabilities and equity
Note
2014
Separate
31 December
2014
(in Baht)
2013
16
1,300,000,000
1,300,000,000
1,300,000,000
1,300,000,000
1,300,000,000
1,000,000,000
3,515,423,218
3,515,423,218
-
16
56,079,360
56,079,360
56,079,360
17
130,000,000
1,211,394,874
(17,963,926)
6,194,933,526
130,000,000
1,211,368,221
6,212,870,799
45,000,000
867,233,751
1,968,313,111
9,008,233,512
9,026,170,785
6,540,935,734
16
9
143
Statement of comprehensive income
Financial
statements
in which the
equity method
is applied
Year ended
31 December
Note
Income
Revenue from sale of goods
Interest income
Other income
Total income
Expenses
Cost of sale of goods
Selling expenses
Administrative expenses
Finance costs
Total expenses
Share of profit of jointly controlled entity
Profit before income tax expense
Tax income
Profit for the year
4
2014
Separate
Year ended
31 December
2014
(in Baht)
6,179,080,161
9,364,836
20,420,163
6,208,865,160
6,179,080,161
9,364,836
20,420,163
6,208,865,160
6,484,375,339
1,352,337
46,113,591
6,531,841,267
8, 20
20
4, 20
4, 21
4,065,204,432
774,179,994
250,418,023
99,415,486
5,189,217,935
4,065,204,432
774,179,994
250,418,023
99,415,486
5,189,217,935
4,425,029,742
931,190,500
130,348,130
161,618,262
5,648,186,634
9
26,653
1,019,673,878
59,086,769
1,078,760,647
1,019,647,225
59,086,769
1,078,733,994
883,654,633
883,654,633
4
22
144
2013
Annual Report 2014
Statement of comprehensive income
Financial
statements
in which the
equity method
is applied
Year ended
31 December
Note
Other comprehensive income
Foreign currency translation
differences for foreign operations
Defined benefit plan actuarial
losses
Income tax on other
comprehensive income
ก�ำไรขาดทุนเบ็ดเสร็จอื่น
Other comprehensive income
for the year, net of income tax
Total comprehensive income
for the year
Earnings per share
Basic earnings per share
ไผ
Separate
Year ended
31 December
2014
2014
(in Baht)
2013
(17,963,926)
-
-
15
-
-
(2,002,379)
12
400,476
400,476
-
(17,563,450)
400,476
(2,002,379)
1,061,197,197
1,079,134,470
881,652,254
0.89
0.89
0.88
24
145
17
16
25
1,300,000,000
3,515,423,218
-
3,515,423,218
300,000,000
-
3,515,423,218
-
-
300,000,000
-
1,000,000,000
Transfer to legal reserve
Balance at 31 December 2014
Comprehensive income for the year
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with owners, recorded
directly in equity
Issue of ordinary shares
Dividends to owners of the Company
Total transactions with owners, recorded
directly in equity
Year ended 31 December 2014
Balance at 1 January 2014
56,079,360
-
-
-
56,079,360
85,000,000
130,000,000
-
-
-
45,000,000
(85,000,000)
1,211,394,874
1,078,760,647
400,476
1,079,161,123
(650,000,000)
(650,000,000)
867,233,751
(17,963,926)
(17,963,926)
(17,963,926)
-
-
-
3,165,423,218
3,815,423,218
(650,000,000)
1,968,313,111
Total
equity
146
(17,963,926) 6,194,933,526
- 1,078,760,647
(17,963,926)
(17,563,450)
(17,963,926) 1,061,197,197
-
-
-
Financial statements in which the equity method is applied
Retained earnings
Surplus on
Total
Issued and Premium on share-based
Currency
other
paid-up
ordinary
payment
Legal
translation components
transactions reserve Unappropriated differences of equity
Note share capital shares
(in Baht)
Statement of changes in equity
Annual Report 2014
17
16
Note
Profit for the year
Transactions with owners, recorded directly in equity
Share-based payment transactions
Total transactions with owners, recorded directly in equity
1,000,000,000
-
-
1,000,000,000
Issued and
paid-up
share capital
56,079,360
-
12,765,300
12,765,300
43,314,060
-
-
-
45,000,000
45,000,000
(in Baht)
(45,000,000)
867,233,751
883,654,633
(2,002,379)
881,652,254
-
30,581,497
Separate financial statements
Surplus on
Retained earnings
share-based
payment
Legal
transactions
reserve
Unappropriated
147
1,968,313,111
883,654,633
(2,002,379)
881,652,254
12,765,300
12,765,300
1,073,895,557
Total
equity
17
16
25
Note
1,300,000,000
-
300,000,000
300,000,000
1,000,000,000
3,515,423,218
-
3,515,423,218
3,515,423,218
-
Issued and
paid-up
Premium on
share capital ordinary shares
ไ
Profit for the year
Transactions with owners, recorded directly in equity
Issue of ordinary shares
Dividends to owners of the Company
Total transactions with owners, recorded directly in equity
56,079,360
-
-
56,079,360
(in Baht)
85,000,000
130,000,000
-
-
45,000,000
(85,000,000)
1,211,368,221
1,078,733,994
400,476
1,079,134,470
(650,000,000)
(650,000,000)
867,233,751
Surplus on
Retained earnings
share-based
payment
Legal
transactions
reserve
Unappropriated
148
6,212,870,799
1,078,733,994
400,476
1,079,134,470
3,815,423,218
(650,000,000)
3,165,423,218
1,968,313,111
Total
equity
Annual Report 2014
Annual Report 2014
Statement of cash flows
Financial
statements
in which the equity
Separate
method is applied financial statements
Year ended
Year ended
31 December 31 December
Note
Cash flows from operating activities
Profit for the year
Adjustments for
Depreciation
Amortisation of intangible assets
Impairment losses on advances for
purchase of right to use trademark
Impairment losses on intangible
assets
Interest income
Finance costs
Loss on write-off of inventories
Allowance for decline in value of
inventories
Unrealised (gain) loss on exchange
Loss on write-off of equipment
(Gain) loss on disposal of equipment
Gain on disposal of intangible assets
Employee benefit expenses
Expenses for share-based payment
transactions
Share of profit of jointly-controlled
entity
Tax income
2014
2014
(in Baht)
2013
1,078,760,647 1,078,733,994
883,654,633
10
11
369,583,530
331,596
369,583,530
331,596
266,839,090
312,000
11
37,383,178
37,383,178
-
11
84,112,150
(9,364,836)
99,415,486
2,046,244
84,112,150
(9,364,836)
99,415,486
2,046,244
(1,352,337)
161,618,262
4,790,457
15
11,733,071
1,574,188
192,141
4,044
3,279,396
11,733,071
1,574,188
192,141
4,044
3,279,396
3,712,136
(3,929,198)
2,990,189
(57,783)
(1,851)
(197,648)
16
-
-
12,765,300
21
8
9
22
(26,653)
(59,086,769) (59,086,769)
1,619,937,413 1,619,937,413 1,331,143,250
149
Financial
statements
in which the equity
Separate
Year ended
Year ended
Note
Changes in operating assets and
liabilities
Other receivables
Refundable value added tax
Inventories
Other current assets
Other non-current assets
Other payables
Accrued expenses
Other current liabilities
Net cash from operating activities
Cash flows from investing activities
Interest received
Advances for purchase of
machinery and equipment
Advances for purchase of right to
use trademark
Purchase of property, plant and
equipment
Sale of property, plant and equipment
Purchase of intangible assets
Sale of intangible assets
Net cash outflow on investment in
jointly-controlled entity
Net cash used in investing activities
2014
2014
(in Baht)
(100,666,329) (100,666,329)
20,794,136
20,794,136
4,693,453
4,693,453
(351,231,822) (351,231,822)
(1,088,623)
(1,088,623)
(835,000)
(835,000)
230,538,722
230,538,722
1,202,192
1,202,192
50,322,598
50,322,598
(848,697)
(848,697)
1,472,818,043 1,472,818,043
(344,202,929)
30,892,157
83,283,464
107,069,327
(6,124,771)
6,750,282
(170,385,253)
(5,322,490)
(85,430,776)
3,224,016
950,896,277
9,364,836
9,364,836
1,352,337
88,353,754
88,353,754
(59,063,159)
(37,383,178)
(37,383,178)
-
(2,231,441,339) (2,231,441,339) (1,532,392,883)
62,617
62,617
93,156,396
(168,499,700) (168,499,700)
(158,589)
4,534,600
9
(135,620,414) (135,620,414)
(2,475,163,424) (2,475,163,424) (1,492,571,298)
150
2013
Annual Report 2014
Financial
statements
in which the equity
Separate
Year ended
Year ended
Note
Cash flows from financing activities
Interest paid
Dividends paid to owners of
the Company
Proceeds from borrowings
Repayment of borrowings
Net proceeds from initial public
offering
Net cash from financing activities
Net increase in cash and cash
equivalents
at 1 January
at 31 December
2014
2014
(in Baht)
(119,886,922)
(119,886,922)
2013
(168,669,864)
25
(650,000,000) (650,000,000)
1,655,856,997 1,655,856,997 2,502,483,374
(3,630,915,998) (3,630,915,998) (1,744,590,966)
16
3,815,423,218 3,815,423,218
1,070,477,295 1,070,477,295
5
Supplemental disclosures of cash flows information:
Property, plant and equipment paid
by cash are detailed as follows:
Increase in property, plant and
equipment
Less-Changes in payables
- Unrealised (gain) loss on
exchange
-Capitalised interest
Property, plant and equipment paid
by cash
589,222,544
68,131,914
68,131,914
47,547,523
83,655,341
83,655,341
36,107,818
151,787,255
151,787,255
83,655,341
2,183,101,389 2,183,101,389 1,314,117,809
63,952,670
63,952,670
228,006,158
125,909
(15,738,629)
125,909
(15,738,629)
(3,929,198)
(5,801,886)
2,231,441,339 2,231,441,339 1,532,392,883
151
Notes to the financial statements
NoteContents
1
General information
2
Basis of preparation of the financial statements
3
Significant accounting policies
4
Related parties
5
6
7
Other receivables
8Inventories
9I
nvestment in jointly-controlled entity
10
11
Intangible assets
12
Deferred tax
13
Interest-bearing liabilities
14
15
16
Share capital
17Reserves
18
Segment information
19
20
Expenses by nature
21
Finance costs
22
Income tax
23
Promotional privileges
24
Basic earnings per share
25Dividends
26
Financial instruments
27
Commitments with non-related parties
28
Events after the reporting period
29
Thai Financial Reporting Standards not yet adopted
152
Annual Report 2014
These notes form an integral part of the financial statements.
The financial statements issued for Thai statutory and regulatory reporting purposes are prepared
in the Thai language. These English language financial statements have been prepared from the
Thai language statutory financial statements, and were approved for issue by the Board of Directors
on 25 February 2015.
1 General information
Ichitan Group Public Company Limited, the “Company”, is incorporated in Thailand on 3 September 2010
and has its registered office as follows:
Head office is located at 2922/301-303, 28th Floor, Charn Issara II Building, New Petchburi Road,
Kwang Bangkapi, Khet Huaykwang, Bangkok 10310, Thailand.
Branch office is located at 111/1 Moo 4, Rojana Industrial Park, Tambol U-Thai, Amphur U-Thai,
Ayutthaya 13120, Thailand.
The Company was listed on the Stock Exchange of Thailand in April 2014.
The Company’s major shareholders during the financial year were Tan Passakornnatee and Eng
Passakornnatee who owned 14% and 9% of the Company’s share capital as at 31 December 2014,
respectively.
The principal activities of the Company are the manufacturing and sale of beverages.
Detail of jointly-controlled entity as at 31 December 2014 is disclosed in note 9 to the financial
statements.
2 Basis of preparation of the financial statements
(a) Statement of compliance
The financial statements are prepared in accordance with Thai Financial Reporting Standards
(“TFRS”); guidelines promulgated by the Federation of Accounting Professions (“FAP”); and
applicable rules and regulations of the Thai Securities and Exchange Commission.
The FAP has issued the following new and revised TFRS relevant to the Company’s operations and
effective for annual accounting periods beginning on or after 1 January 2014:
TFRS
TAS 1 (revised 2012)
Topic
Presentation of financial statements
Statement of Cash Flows
Income Taxes
153
TFRS
TFRS 2 (revised 2012)
TFRIC 1
TFRIC 4
TFRIC 10
TFRIC 13
TIC 15
TIC 27
TIC 32
Topic
Leases
Revenue
Employee Benefits
The Effects of Changes in Foreign Exchange Rates
Related Party Disclosures
Interests in Joint Ventures
Interim Financial Reporting
Impairment of Assets
Intangible Assets
Share-based Payment
Non-current Assets held for Sale and Discontinued Operations
Operating Segments
Changes in Existing Decommissioning, Restoration and
Similar Liabilities
Determining whether an Arrangement contains a Lease
Interim Financial Reporting and Impairment
Customer Loyalty Programmes
Operating Leases-Incentives
Evaluating the Substance of Transactions Involving the Legal
Form of a Lease
Intangible Assets-Web Site Costs
The initial application of these new and revised TFRS has resulted in changes in certain of the
Company’s accounting policies. These changes have no material effect on the financial statements.
In addition to the above new and revised TFRS, the FAP has issued a number of other new and revised
TFRS which are effective for annual financial periods beginning on or after 1 January 2015 and have
not been adopted in the preparation of these financial statements. Those new and revised TFRS
that are relevant to the Company’s operations are disclosed in note 29 to the financial statements.
154
Annual Report 2014
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except as stated in the
accounting policies.
(c) Functional and presentation currency
The financial statements are prepared and presented in Thai Baht, which is the Company’s functional
currency. All financial information presented in Thai Baht has been rounded in the notes to the
financial statements to the nearest thousand Baht unless otherwise stated.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with TFRS requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts
of assets, liabilities, income and expenses. Actual results may differ from estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which estimates are revised and in any future periods
affected.
Information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial
statements is included in the following notes:
Note 3 (q)
Note 11
Note 12
Note 15
Note 26
Current and deferred taxation
Key assumptions used in discounted cash flow projections
Utilisation of tax losses
Measurement of defined benefit obligations
Valuation of financial instruments
(e) The first time preparation of the financial statements in which the
equity method is applied
During 2014, the Company has invested in PT Ichi Tan Indonesia, a jointly-controlled entity, with
PT Atri Pasifik. As established by the joint venture agreement, investors have joint control over
the significant financial and operating decisions. Accordingly, the Company has accounted for the
investment in the jointly-controlled entity using the equity method and has initially prepared the
financial statements in which the equity method is applied for the year ended 31 December 2014
(see note 9 to the financial statements).
155
3 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in
these financial statements.
(a) Basis of preparation of the financial statements in which the equity
method is applied
The financial statements in which the equity method is applied relate to the Company and a jointlycontrolled entity.
Jointly-controlled entity
Jointly-controlled entity is the entity over whose activities the Company has joint control, established
by contractual agreement and requiring unanimous consent for strategic financial and operating
decisions.
Investment in jointly-controlled entity is accounted for in the financial statements in which the
equity method is applied using the equity method (equity-accounted investee) and are recognised
initially at cost. The cost of the investment includes transaction costs.
Transactions eliminated on financial statements in which the equity method is applied
Unrealised gains arising from transactions with jointly-controlled entity are eliminated against the
investment to the extent of the Company’s interest in the investee. Unrealised losses are eliminated
in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
(b) Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency at exchange rates at
the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated to the functional
currency at the exchange rates at the reporting date.
Non-monetary assets and liabilities measured at cost in foreign currencies are translated to the
functional currency at the exchange rates at the dates of the transactions.
Foreign currency differences are generally recognised in profit or loss.
156
Annual Report 2014
Foreign operations
The assets and liabilities of foreign operations are translated to Thai Baht at the exchange rates
at the reporting date.
The revenues and expenses of foreign operations are translated to Thai Baht at rates approximating
the exchange rates at the dates of the transactions.
Foreign exchange differences are recognised in other comprehensive income and presented in the
foreign currency translation reserve in equity until disposal of the investment.
When a monetary item receivable from or payable to a foreign operation is neither planned nor
likely in the foreseeable future, exchange gains and losses arising from such a monetary item
are considered to form part of a net investment in a foreign operation and are recognised in other
comprehensive income, and presented in the foreign currency translation reserve in equity until
disposal of the investment.
(c) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, call deposits and highly liquid short-term
investments.
(d) Trade and other accounts receivable
Trade and other accounts receivable are stated at their invoice value less allowance for doubtful
accounts.
The allowance for doubtful accounts is assessed primarily on analysis of payment histories and
future expectations of customer payments. Bad debts are written off when incurred.
(e)Inventories
Inventories are measured at the lower of cost and net realisable value.
Cost is calculated using the weighted average cost principle, and comprises all costs of purchase,
costs of conversion and other costs incurred in bringing the inventories to their present location
and condition. In the case of manufactured inventories and work-in-progress, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs to complete and to make the sale.
157
(f)Investment
Investment in jointly-controlled entity
Investment in jointly-controlled entity in the separate financial statements of the Company is
accounted for using the cost method. Investment in jointly-controlled entity in the financial
statements in which the equity method is applied is accounted for using the equity method.
(g) Property, plant and equipment
Recognition and measurement
Owned assets
Property, plant and equipment are stated at cost less accumulated depreciation and impairment
losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset and any other
costs directly attributable to bringing the assets to a working condition for their intended use, the
costs of dismantling and removing the items and restoring the site on which they are located, and
capitalised borrowing costs. Purchased software that is integral to the functionality of the related
equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by
comparing the proceeds from disposal with the carrying amount of property, plant and equipment,
and are recognised net within other income in profit or loss.
Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will
flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced
part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are
recognised in profit or loss as incurred.
158
Annual Report 2014
Depreciation
Depreciation is calculated based on depreciable amount, which is the cost of an asset, or other
amount substituted for cost, less its residual value.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of
each component of an item of property, plant and equipment. The estimated useful lives are as
follows:
Land improvements
Building and building improvements
Machinery and equipment
Furniture, fixtures and office equipment
Tool and equipment
Vehicles
5 - 20
5 - 30
10 - 15
5 - 15
5
5
years
years
years
years
years
years
No depreciation is provided on freehold land or assets under construction and installation.
Depreciation methods, useful lives and residual values are reviewed at each financial year-end
and adjusted if appropriate.
(h) Intangible assets
Intangible assets that are acquired by the Company and have finite useful lives are measured at
cost less accumulated amortisation and accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure is recognised in profit or
loss as incurred.
Amortisation
Amortisation is based on the cost of the asset, or other amount substituted for cost, less its residual
value.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives
of intangible assets, other than right to use trademark, from the date that they are available for
use, since this most closely reflects the expected pattern of consumption of the future economic
benefits embodied in the asset. The estimated useful lives for the current and comparative periods
are as follows:
Software licences
Right to use trademark
10 years
Indefinite useful lives
159
Amortisation methods, useful lives and residual values are reviewed at each financial year-end
and adjusted if appropriate.
(i)Impairment
The carrying amounts of the Company’s assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, the assets’ recoverable
amounts are estimated. For intangible assets that have indefinite useful lives, the recoverable
amount is estimated each year at the same time.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount. The impairment loss is recognised in profit or loss.
Calculation of recoverable amount
The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair
value less costs to sell. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. For an asset that does not generate cash
inflows largely independent of those from other assets, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
Reversals of impairment
Impairment losses recognised in prior periods in respect of non-financial assets are assessed
at each reporting date for any indications that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
(j) Interest-bearing liabilities
Interest-bearing liabilities are recognised at cost.
(k) Trade and other accounts payable
Trade and other accounts payable are stated at cost.
160
Annual Report 2014
(l) Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed
contributions into a separate entity (provident fund) and will have no legal or constructive obligation
to pay further amounts. Obligations for contributions to defined contribution pension plans are
recognised as an employee benefit expense in profit or loss in the periods during which services
are rendered by employees.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
The Company’s net obligation in respect of defined benefit pension plans is calculated separately
for each plan by estimating the amount of future benefit that employees have earned in return for
their service in the current and prior periods; that benefit is discounted to determine its present
value. Any unrecognised past service costs and the fair value of any plan assets are deducted.
The discount rate is the yield at the reporting date on government bonds that have maturity dates
approximating the term of the Company’s obligations and that are denominated in the same
currency in which the benefits are expected to be paid.
The calculation is performed by a qualified actuary using the projected unit credit method.
When the benefits of a plan are improved, the portion of the increased benefit relating to past
service by employees is recognised in profit or loss on a straight-line basis over the average period
until the benefits become vested. To the extent that the benefits vest immediately, the expense is
recognised immediately in profit or loss.
The Company recognises all actuarial gains and losses arising from defined benefit plans in other
comprehensive income and all expenses related to defined benefit plans in profit or loss.
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed
as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profitsharing plans if the Company has a present legal or constructive obligation to pay this amount as
a result of past service provided by the employee, and the obligation can be estimated reliably.
Share-based payments
The grant-date fair value of share-based payment awards granted to employees is recognised as
an employee expense, with a corresponding increase in equity, over the period that the employees
become unconditionally entitled to the awards. The amount recognised as an expense is adjusted
to reflect the actual number of awards for which the related service and non-market vesting
conditions are expected to be met. For business partners, the share-based payment awards granted
vest immediately on the grant date, and the grant-date fair value of the awards is recognised as
an expense immediately.
161
(m)Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The unwinding of the discount is recognised
as finance cost.
(n)Revenue
Revenue excludes value added taxes and is arrived at after deduction of trade discounts.
Sale of goods
Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been
transferred to the buyer. No revenue is recognised if there is continuing management involvement
with the goods or there are significant uncertainties regarding recovery of the consideration due,
associated costs or the probable return of goods.
Loyalty programmes
The Company has customer loyalty programmes whereby customers are awarded the right to
purchase products from the Company at a discount. The fair value of the consideration received or
receivable in respect of the initial sale is allocated between the right and the other components of
the sale. The amount allocated is estimated by reference to the fair value of the right to purchase
products at a discount. The fair value is estimated based on the amount of the discount adjusted to
take into account the expected forfeiture rate. Such amount is deferred and revenue is recognised
only when the right is redeemed and the Company has fulfilled its obligations. The amount of
revenue recognised in those circumstances is based on the number of the right that has been
redeemed in exchange for discounted products, relative to the total number of the right that is
expected to be redeemed. Deferred revenue is also released to profit or loss when it is no longer
considered probable that the right will be redeemed.
Interest income
Interest income is recognised in profit or loss on the accrual basis.
(o) Finance costs
Finance costs comprise interest expense on borrowings and unwinding of the discount on provisions
and contingent consideration.
162
Borrowing costs that are not directly attributable to the acquisition, construction or production of
a qualifying asset are recognised in profit or loss.
Annual Report 2014
(p) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis
over the term of the lease.
Contingent lease payments are accounted for by revising the minimum lease payments over the
remaining term of the lease when the lease adjustment is confirmed.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Company determines whether such an arrangement is or
contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is
dependent on the use of that specified asset. An arrangement conveys the right to use the asset
if the arrangement conveys to the Company the right to control the use of the underlying asset.
At inception or upon reassessment of the arrangement, the Company separates payments and
other consideration required by such an arrangement into those for the lease and those for other
elements on the basis of their relative fair values. If the Company concludes for a finance lease
that it is impracticable to separate the payments reliably, an asset and a liability are recognised
at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced
as payments are made and an imputed finance charge on the liability is recognised using the
Company’s incremental borrowing rate.
(q) Income tax
Income tax expense for the year comprises current and deferred tax. Current and deferred taxes
are recognised in profit or loss except to the extent that they relate to a business combination, or
items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year,
using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences: the initial recognition of
assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss; and differences relating to investments in jointly-controlled
entities to the extent that is probable that they will not reverse in the foreseeable future.
The measurement of deferred tax reflects the tax consequences that would follow the manner in
which the Company expects, at the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
163
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences
when they reverse, using tax rates enacted or substantively exacted at the reporting date.
In determining the amount of current and deferred tax, the Company takes into account the impact
of uncertain tax positions and whether additional taxes and interest may be due. The Company
believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment
of many factors, including interpretations of tax law and prior experience. This assessment relies
on estimates and assumptions and may involve a series of judgements about future events. New
information may become available that causes the Company to change its judgement regarding
the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in
the period that such a determination is made.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the
same taxable entity, or on different tax entities, but they intend to settle current tax assets and
liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be
available against which the temporary differences can be utilised. Deferred tax assets are reviewed
at each reporting date and reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
(r) Earnings per share
The Company presents basic earnings per share (“EPS”) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by
the weighted average number of ordinary shares outstanding during the year.
(s) Segment reporting
Segment results that are reported to the chief operating decision maker include items directly
attributable to a segment as well as those that can be allocated on a reasonable basis.
164
Annual Report 2014
4 Related parties
For the purposes of these financial statements, parties are considered to be related to the Company
if the Company has the ability, directly or indirectly, to control or joint control the party or exercise
significant influence over the party in making financial and operating decisions, or vice versa, or
where the Company and the party are subject to common control or common significant influence.
Related parties may be individuals or other entities.
Relationship with jointly-controlled entity is disclosed in note 9 to the financial statements.
Relationship with key management and other related parties were as follows:
Name of entities
Country of Nature of relationships
incorporation/
Tan Passakornnatee
Thai
I Am Green Tea Co., Ltd.
Thailand
Kin Kab Tan Co., Ltd.
Tan Asset Co., Ltd.
Tan Eng Asset Co., Ltd.
Passakornnatee Co., Ltd.
Japanese Prime Restaurants
Wedding Business Consultant
Co., Ltd.
Ezili Company Limited
Kin Rong Deum Co., Ltd.
Tanboon Co., Ltd.
Thailand
Thailand
Thailand
Thailand
Thailand
Persons having authority and responsibility
for planning, directing and controlling the
activities of the entity, directly or indirectly,
including major shareholder and director of
the Company
Major shareholder and director of the
Company
Shared shareholders and a close relative of
the director of the Company is the director
Shared directors and shareholders
Shared shareholders
Eng Passakornnatee
Thai
Thailand
Thailand
Thailand
Thailand
Shared shareholders
Shared shareholders
165
The pricing policies for transactions with related parties are explained further below.
Transactions
Pricing policies
Sale/Purchase of goods
Other income/expense
Interest expense
Sales promotion expenses
Market price
Agreed price
Close to the prevailing market interest rate
Agreed price
Significant transactions for the years ended 31 December with related parties were as follows:
Financial
statements in
which the
equity method
Separate
is applied
Year ended 31 December
Related parties
Sale of goods
Gain on sale of assets of food segment
Sales promotion expenses
Other expense
Interest expense
Key management personnel
Key management personnel compensation
Short-term employee benefit
Post-employment benefits
Total key management personnel
compensation
166
2014
2014
(in thousand Baht)
741,215
3,221
11,726
30,477
2013
741,215
3,221
11,726
1,034,575
67
14,007
4,588
42,096
28,809
1,668
20,988
1,731
30,477
22,719
Annual Report 2014
Balances as at 31 December with related parties were as follows:
Financial
statements in
which the
equity method
Separate
is applied
2014
Related parties
2014
(in thousand Baht)
38,238
38,238
2013
206,926
Financial
statements in
which the
equity method
Separate
is applied
Accrued expenses
2014
Related parties
2014
(in thousand Baht)
10,253
10,253
2013
-
Financial
statements in
which the
equity method
Separate
is applied
Accrued interest
2014
Major shareholder
2014
(in thousand Baht)
-
2013
3,397
Financial
statements in
which the
equity method
Separate
is applied
Long-term loans from related parties
Major shareholder
2014
2014
(in thousand Baht)
-
2013
1,000,000
167
Movements during the years ended 31 December of long-term loans from related parties were
as follows:
Financial
statements in
which the
equity method
Separate
is applied
2014
Major shareholder
At 1 January
Increase
Decrease
At 31 December
Related party
At 1 January
Decrease
At 31 December
Total long-term loans from related parties
At 1 January
Increase
Decrease
At 31 December
2014
(in thousand Baht)
2013
1,000,000
(1,000,000)
-
1,000,000
(1,000,000)
-
750,000
520,000
(270,000)
1,000,000
-
-
30,000
(30,000)
-
1,000,000
(1,000,000)
-
1,000,000
(1,000,000)
-
780,000
520,000
(300,000)
1,000,000
The unsecured long-term loans from a major shareholder bear interest at the rate of 4% to 5% per
annum. The Company fully repaid these loans in April 2014.
168
Annual Report 2014
Significant agreement with related party
Product distribution agreement
On 20 June 2014, the Company entered into an agreement to grant a related party (I Am Green
Tea Co., Ltd.) the authority and responsibility to act as a product distributor for the Company. This
agreement shall be in effect from 1 July 2014 to 30 June 2017.
5 Cash and cash equivalents
Financial
statements in
which the
equity method
Separate
is applied financial statements
2014
2014
(in thousand Baht)
2,280
(7,293)
(7,293)
156,800
156,800
151,787
Cash on hand
Cash at financial institutions - current accounts
Cash at financial institutions - savings accounts
Total
2013
95
(84,140)
167,700
83,655
Cash and cash equivalents of the Company as at 31 December 2014 and 2013 were denominated
entirely in Thai Baht.
6 Trade accounts receivable
Financial
statements in
which the
equity method
Separate
is applied
Note
Related parties
Other parties
Total
4
2014
2014
(in thousand Baht)
38,238
38,238
871,398
871,398
909,636
909,636
2013
206,926
602,044
808,970
169
Aging analyses for trade accounts receivable were as follows:
Financial
statements in
which the
equity method
Separate
is applied
2014
Related parties
Within credit terms
Other parties
Within credit terms
Overdue less than 3 months
Total
2014
(in thousand Baht)
2013
38,238
38,238
38,238
38,238
206,926
206,926
870,723
675
871,398
870,723
675
871,398
601,976
68
602,044
909,636
909,636
808,970
The normal credit term granted by the Company ranges from 30 days to 45 days.
Trade accounts receivable of the Company as at 31 December 2014 and 2013 were denominated
7 Other receivables
Financial
statements in
which the
equity method
Separate
is applied
2014
Other parties
Refundable import duty
Rebate and sponsorship receivables
Prepaid expenses
Others
Total
170
2014
(in thousand Baht)
49,332
16,955
10,914
515
77,716
49,332
16,955
10,914
515
77,716
2013
83,776
9,816
4,226
692
98,510
Annual Report 2014
8Inventories
Financial
statements in
which the
equity method
Separate
is applied
2014
Finished goods
Raw materials
Supplies
Total
Less allowance for decline in value
Net
Inventories recognised as an expense in
‘cost of sale of goods’:
-Cost
-Write-down to net realisable value
-Loss on write-off of inventories
Net
2014
(in thousand Baht)
410,362
410,362
261,046
261,046
10,508
10,508
681,916
681,916
(6,013)
(6,013)
675,903
675,903
4,051,425
11,733
2,046
4,065,204
4,051,425
11,733
2,046
4,065,204
2013
200,213
139,442
2,507
342,162
(3,712)
338,450
4,425,030
4,425,030
171
9 Investment in jointly-controlled entity
Financial
statements in
which the
equity method
Separate
is applied
2014
At 1 January
Acquisitions
Share of net profits of equity-accounted
jointly-controlled entity
Foreign currency translation differences
At 31 December
2014
(in thousand Baht)
2013
135,620
135,620
-
27
(17,964)
117,683
135,620
-
Acquisitions
On 27 August 2014, the Company entered into a joint venture agreement with PT Atri Pasifik (“AP”),
a company incorporated in Indonesia, in order to invest in PT Ichi Tan Indonesia, a new joint
venture established in Indonesia. The purposes of the joint venture are to produce and sell readyto-drink beverage branded “Ichitan” in Indonesia. The Company and AP will equally invest in the
joint venture (50% of the issued and paid-up share capital of the joint venture) totalling Indonesian
Rupiah 200,000 million (or approximately Baht 575 million). The Company paid an initial authorised
share capital in 50% of the paid-up share capital of Baht 135.6 million and the incorporation of the
joint venture was completed on 25 November 2014. As at 31 December 2014, PT Ichi Tan Indonesia
is the jointly-controlled entity of the Company.
172
Manufacturing and
sale of beverages
Indonesia
50
2014
(%)
2013
-
286,780
2014
2013
-
135,620
135,620
-
2014
2013
(in thousand Baht)
None of the Company’s jointly-controlled entity is publicly listed and consequently do not have published price quotations.
PT Ichi Tan Indonesia
Total
Type of
business
Financial statements in which the equity method is applied /
Country of
Ownership
incorporation
interest
Paid-up capital
Cost
Investment in jointly-controlled entity as at 31 December 2014 and 2013 for the years then ended were as follows:
117,683
117,683
2014
2013
Equity
173
-
2014
PT Ichi Tan Indonesia 31 December
Total
50
(%)
251,209
251,209
10 251,219
10 251,219
314
314
-
(in thousand Baht)
314
314
1,057
1,057
1,004
1,004
174
53
53
NonNonReporting Ownership Current current Total Current current Total
Total
Total
date
interest assets assets assets liabilities liabilities liabilities revenues expenses Profit
The following summarised financial information on jointly-controlled entity is not adjusted for the percentage ownership held by the Company:
Annual Report 2014
Cost
At 1 January 2013
Additions
Transfers
Disposals
At 31 December 2013
and 1 January 2014
Additions
Transfers
Disposals
At 31 December 2014
54,790
422
55,212
18,544
73,756
200,508
-
200,508
231,190
431,698
Land
1,105,258
34,325
795,544
(25)
1,935,102
1,065,007
22,718
17,533
2,905,676
42,537
971,749
3,919,962
1,859,348
129,291
917,037
-
54,715
1,848
(104)
56,459
46,906
7,821
(12)
(in thousand Baht)
59,453
26,927
2,180
(294)
88,266
42,581
19,091
1,742
(3,961)
3,978
544
(148)
4,374
3,621
521
(164)
Total
175
1,010,938 5,395,738
1,845,730 2,183,101
(1,788,017)
(571)
1,068,651 7,578,268
812,997 4,085,758
1,134,253 1,314,117
(936,312)
(4,137)
Assets
Furniture,
Building
under
fixtures
and
construction
Tool
and
Land building Machinery
and
and
office
and
improve- improvements equipment equipment equipment Vehicles installation
ments
10 Property, plant and equipment
Net book value
At 1 January 2013
At 31 December 2013
and 1 January 2014
At 31 December 2014
Depreciation
At 1 January 2013
Depreciation charge
for the year
Disposals
At 31 December 2013
and 1 January 2014
Depreciation charge
for the year
Disposals
At 31 December 2014
(3,477)
(8,557)
-
50,132
65,199
(5,080)
-
200,508
431,698
(2,770)
-
-
52,480
(2,310)
-
200,508
Land
997,488
1,736,691
1,015,641
(90,658)
17
(198,411)
(107,770)
(58,404)
-
(49,366)
2,638,243
3,400,923
1,778,132
(251,606)
(519,039)
(267,433)
(186,217)
-
(81,216)
42,114
35,893
41,587
(8,031)
66
(20,566)
(12,601)
(7,286)
4
(5,319)
(in thousand Baht)
40,594
54,563
34,015
(14,993)
149
(33,703)
(18,859)
(11,377)
1,084
(8,566)
1,905
1,563
2,273
(819)
81
(2,811)
(2,073)
(785)
60
(1,348)
1,010,938
1,068,651
812,997
-
-
-
-
Assets
Furniture,
Building
under
fixtures
and
construction
Tool
and
Land building Machinery
and
and
office
and
improve- improvements equipment equipment equipment Vehicles installation
ments
176
4,981,922
6,795,181
3,937,633
(369,584)
313
(783,087)
(413,816)
(266,839)
1,148
(148,125)
Total
Annual Report 2014
Annual Report 2014
Security
As at 31 December 2014, the Company had mortgaged/pledged assets amounting to approximately
Baht 4,059.6 million (2013: Baht 2,157.3 million) as collateral against loans from financial institutions,
as described in note 13 to the financial statements.
Assets under construction and installation
Assets under construction and installation as at 31 December 2014 amounted to Baht 1,068.7 million
(2013: Baht 1,010.9 million), and mainly represented construction costs of factory building and cost
of machinery and equipment including the related installation costs.
Capitalised borrowing costs relating to the construction of the factory amounted to Baht 15.7 million
(2013: Baht 5.8 million), with a capitalisation rate ranging from 3.53% to 5.00% per annum (2013:
4.19% - 5.01% per annum).
11 Intangible assets
Financial statements in which
the equity method is applied /
Software Right to use
licences trademark
Total
(in thousand Baht)
Cost
At 1 January 2013
Additions
At 31 December 2013 and 1 January 2014
Additions
At 31 December 2014
2,999
159
3,158
275
3,433
168,224
168,224
2,999
159
3,158
168,499
171,657
177
the equity method is applied /
Software Right to use
licences trademark
Total
(in thousand Baht)
Amortisation and impairment losses
At 1 January 2013
Amortisation for the year
Amortisation for the year
Impairment loss
At 31 December 2014
(328)
(312)
(640)
(332)
(972)
(84,112)
(84,112)
(328)
(312)
(640)
(332)
(84,112)
(85,084)
Net book value
At 1 January 2013
At 31 December 2014
2,671
2,518
2,461
84,112
2,671
2,518
86,573
On 15 May 2014, the Company entered into a master sale and purchase agreement to acquire the
right to use Bireley’s fruit beverage trademark, including the production formulas, from a local
company for the consideration of Baht 224.3 million. The total purchase price is comprised of the
right to use Bireley’s trademark to produce and distribute fruit beverage in 16 countries worldwide
at the amounts as specified in the agreement, totalling Baht 215.0 million, and the production
formulas of Baht 9.3 million. As at 31 December 2014, the Company has paid for the right to use
Bireley’s trademark and production formulas in amount of Baht 205.6 million; of which the right
to use Bireley’s trademark in certain countries and the production formulas are registered and
transferred to the Company totalling Baht 168.2 million, and were recorded in the account “Intangible
assets”. The rights to use Bireley’s trademark in some countries were in the process of registration,
totalling Baht 37.4 million, and were recorded in the account “Advances for purchase of right to
use trademark”. These advances will be transferred to the account “Intangible assets” upon the
completion of the subsequent transfer.
178
Annual Report 2014
As at 31 December 2014, the Company has no plan to sell product under Bireley’s trademark to
overseas countries, except for Thailand, and unable to reliably estimate future cash flows from
the use of Bireley’s trademark excluding the use of Bireley’s trademark in Thailand. Therefore,
the management of the Company recognised an impairment loss for the right to use trademark
in the account “Intangible assets” amounting Baht 84.1 million and in the account “Advances for
purchase of right to use trademark” amounting to Baht 37.4 million totalling Baht 121.5 million.
12 Deferred tax
Movements in total deferred tax assets and liabilities during the year were as follows:
Financial statements in which the equity
method is applied /
(Charged) / Credited to:
At 31
Other
Profit or comprehensive December
2014
income
loss
(in thousand Baht)
At 1
January
2014
Deferred tax assets
Allowance for decline in value of
inventories
Impairment loss on advances for
purchase of right to use trademark
Impairment loss on intangible assets
Tax loss carry forward
Total
-
862
-
862
-
7,477
16,140
1,792
33,812
60,083
400
400
7,477
16,140
2,192
33,812
60,483
Deferred tax liability
Amortisation gap of intangible assets
Total
-
(996)
(996)
-
(996)
(996)
Net
-
59,087
400
59,487
179
Deferred tax assets have not been recognised in respect of the following items:
Financial
statements in
which the
equity method
is applied
2014
Tax losses
Deductible temporary differences
Total
Separate
2014
(in thousand Baht)
-
2013
75,845
2,123
77,968
As at 31 December 2013, the Company did not recognise tax losses from non-promoted business
which expire in 2015 to 2018. The deductible temporary differences do not expire under current
tax legislation. Deferred tax assets have not been recognised in respect of these items because
it is not probable that there will be future taxable profits against which the Company can utilise
the benefits therefrom.
13 Interest-bearing liabilities
Note
Current
Trust receipts
- secured
Total short-term loans from
financial institutions
Current portion of long-term loans
from financial institutions
- secured
Total current
180
Financial
statements in
which the
equity method
Separate
2014
2014
(in thousand Baht)
2013
28,224
28,224
355,826
28,224
28,224
355,826
153,841
182,065
153,841
182,065
230,805
586,631
Annual Report 2014
Financial
statements in
which the
equity method
Separate
Note
Non-current
Long-term loans from financial institutions
- secured
- unsecured
Total non-current
Total
4
2014
2014
(in thousand Baht)
2013
1,780,437
1,780,437
2,350,930
1,780,437
1,780,437
1,000,000
3,350,930
1,962,502
1,962,502
3,937,561
The periods to maturity of interest-bearing liabilities as at 31 December were as follows:
Financial
statements in
which the
equity method
Separate
2014
Within one year
After one year but within five years
After five years
Total
2014
(in thousand Baht)
182,065
182,065
1,672,672
1,672,672
107,765
107,765
1,962,502
1,962,502
2013
586,631
2,757,117
593,813
3,937,561
Interest-bearing liabilities of the Company as at 31 December 2014 and 2013 were denominated
The Company’s liabilities under trust receipts, machinery and equipment have been released to
the Company in trust for the financial institutions. The Company is accountable to the financial
institutions for such machinery and equipment.
181
Secured interest-bearing liabilities as at 31 December were secured on the following assets:
Financial
statements in
which the
equity method
Separate
is applied
Note
Total
11
2014
2014
(in thousand Baht)
4,059,619
4,059,619
4,059,619
4,059,619
2013
2,157,339
2,157,339
As at 31 December 2014, the Company entered into significant secured long-term loan agreements
with financial institutions as follows:
The first financial institution
Carrying
amount
Approved as at 31
credit December
Borrowing
2014
agreement facilities
182
Number 1
dated 29
March 2011
and
addendum to
the loan
agreement
dated 4 April
2012
691.0
million Baht
-
Number 2
dated 11
October 2011
437.5
million Baht
-
Interest rate
(% per annum)
Interest from the signing date of the loan agreement
to 31 December 2012
at the rate of 4% per annum, from 1 January 2013 to
31 March 2015 at the rate
of MLR minus 2.37% per
annum and subsequently
at the rate of MLR
minus2.12% per Annum
Interest from the drawdown
date to 31 March 2014
at the rate of MLR minus 2.37% per annum and
subsequently at the rate of MLR minus 2.12% per
annum
Term of
payment
Monthly,
repayable in 9 years and the first
installment
is due in April 2014
Monthly,
repayable in 7 years and the first
installment is
due in April
2013
Annual Report 2014
Carrying
amount
Approved as at 31
credit December
Borrowing
2014
agreement facilities
Number 3
dated 4
April 2012
972.0
million Baht
Number 4
dated 20
July 2012
224.0
million Baht
Number 5
dated 14
October 2014
600.0
million Baht
Interest rate
(% per annum)
400.0
million Baht date to 31 December 2012
at the rate of 4% per
annum, from
1 January 2013 to
31 March 2015 at the rate of MLR minus 2.37% per
annum and subsequently at the rate of MLR minus
2.12% per annum
date to 31 March 2015
at the rate of MLR minus
2.37% per annum and
subsequently at the rate of MLR minus 2.12% per annum
15.5
Interest rate is 6 months million Baht BIBOR rate plus 1.25%
per annum
Term of
payment
Monthly,
repayable in
9 years and
the first
installment
is due in April
2014
Monthly,
repayable in
9 years and
the first
installment
is due in April
2014
Monthly,
repayable in
7 years and
the first
installment
is due in
October 2015
In April 2014, the Company repaid long-term loans agreements number 1, number 2 and number 4
with the fund proceeds from the initial public offering.
As security for its borrowings, the Company must mortgage/pledge land and construction thereon,
machinery and equipment of the factory, and land and construction thereon of related parties,
including personal guarantees of some directors of the Company, and a related party, as collateral
against loans from financial institution. On 13 November 2013, the Company mortgaged its assets
amounting to Baht 2,860.5 million with the first financial institution to secure the loan obligation
as prescribed under the long-term loan agreements.
183
Under the long-term loan agreements, the Company must be in compliance with the debt covenants
and maintain the required financial ratios and other terms as stated in the agreements, such as
Tan Passakornnatee and his family must maintain his shareholding at not less than 30% of the
authorised share capital and restrictions on dividend distributions if DSCR is less than 1.25.
The second financial institution
Approved Carrying amount
as at 31
Interest rate
credit
Borrowing
agreement facilities December 2014 (% per annum)
Number 1
dated 12 July
2013 and
addendum to
the loan
agreement
dated 26
August 2014
1,300.0
million Baht
1,000.0
million Baht
Interest for the first
to the second year
at MLR minus
2.625% per annum
and subsequently
at MLR minus 2%
per annum.
Term of
payment
Monthly,
repayable in
7 years and
the first
installment
is due in
January 2016
As security for its borrowings, the Company must mortgage/pledge land and construction thereon,
machinery and equipment of the factory, including personal guarantees of some directors of the
Company.
Under the long-term loan agreements, the Company must be in compliance with the debt covenants
and maintain the required financial ratios and other terms as stated in the agreements, such as
Tan Passakornnatee and his family must maintain his shareholding at not less than 30% of the
authorised share capital and restrictions on dividend distributions if DSCR is less than 1.25.
The third financial institution
Approved Carrying amount
as at 31
Interest rate
credit
Borrowing
agreement facilities December 2014 (% per annum)
Number 1
dated 20
August 2013
184
770.0
million Baht
518.8
million Baht
Interest rate is
6 months BIBOR
rate plus 1.25%
per annum
Term of
payment
Quarterly,
repayable in
5 years and
the first
installment
is due in
February 2014
Annual Report 2014
As security for its borrowings, the Company must mortgage/pledge land and construction
thereon, machinery and equipment of the factory, and land and construction thereon of related
parties, including personal guarantees of some directors of the Company and a related party. On
2 August 2013, the Company registered a second mortgage of land with the third financial institution
to secure these loan obligations for credit facilities of Baht 20 million.
Interest rates
Interest rates as at 31 December 2014 and 2013 were as follows:
the equity method is applied/
2014
2013
(% per annum)
3.09 - 3.40
3.30 - 5.00
4.00
3.53 - 4.88
3.92 - 4.89
Short-term loans from financial institutions
Unutilised credit facilities
As at 31 December 2014 the Company had unutilised credit facilities totaling Baht 1,356.3 million
(2013: Baht 2,166.9 million).
14 Trade accounts payable
Financial
statements in
which the
equity method
is applied
2014
Other parties
Total
Separate
2014
(in thousand Baht)
519,325
519,325
519,325
519,325
2013
288,858
288,858
185
The currency denomination of trade accounts payable as at 31 December was as follows:
Financial
statements in
which the
equity method
is applied
2014
Separate
2014
(in thousand Baht)
485,011
485,011
34,314
34,314
519,325
519,325
Thai Baht (THB)
United States Dollars (USD)
Total
2013
288,858
288,858
15 Employee benefit obligations
Financial
statements in
which the
equity method
is applied
2014
obligations for:
Total
Statement of comprehensive income:
Recognised in profit or loss:
Total
186
2014
(in thousand Baht)
10,960
10,960
Financial
statements in
which the
equity method
is applied
2014
Separate
10,960
10,960
2013
7,681
7,681
Separate
2014
(พันบาท)
3,279
3,279
2013
34
34
Annual Report 2014
Financial
statements in
which the
equity method
is applied
2014
Recognised in other comprehensive
income:
Actuarial losses recognised in the year
Cumulative actuarial losses recognised
Separate
2014
(in thousand Baht)
2,002
2,002
2013
2,002
2,002
The Company operate a defined benefit pension plan based on the requirement of Thai Labour
Protection Act B.E. 2541 (1998) to provide retirement benefits to employees based on pensionable
remuneration and length of service.
The statement of financial position obligation was determined as follows:
Financial
statements in
which the
equity method
is applied
2014
Present value of unfunded obligations
Statement of financial position obligation
Separate
2014
(in thousand Baht)
10,960
10,960
10,960
10,960
2013
7,681
7,681
187
Movement in the present value of the defined benefit obligations
Financial
statements in
which the
equity method
Separate
is applied
2014
Defined benefit obligations
at 1 January
Current service costs and interest
Curtailment gain
Actuarial losses in other comprehensive
income
Defined benefit obligations at 31 December
2014
(in thousand Baht)
2013
7,681
3,279
-
7,681
3,279
-
5,645
1,557
(1,523)
10,960
10,960
2,002
7,681
Expense recognised in profit or loss (note 19 to the financial statements)
Financial
statements in
which the
equity method
Separate
is applied
2014
Current service costs
Interest on obligation
Curtailment gain
Total
188
2014
(in thousand Baht)
2,949
330
3,279
3,279
2013
1,326
231
(1,523)
34
Annual Report 2014
The expense is recognised in the following line items in the statement of comprehensive income:
Financial
statements in
which the
equity method
is applied
2014
Cost of sale of goods
Administrative expenses
Finance costs
Total
Separate
2014
(in thousand Baht)
757
757
2,192
2,192
330
330
3,279
3,279
2013
362
(559)
231
34
Actuarial losses recognised in other comprehensive income:
Financial
statements in
which the
equity method
is applied
2014
Included in retained earnings:
At 1 January
Recognised during the year
At 31 December
Separate
2014
(in thousand Baht)
2,002
2013
2,002
2,002
2,002
2,002
Principal actuarial assumptions at the reporting date (expressed as weighted averages):
Financial
statements in
which the
equity method
is applied
2014
Discount rate
Future salary increases
Separate
2014
(in thousand Baht)
4.3
4.3
8-10
8-10
2013
4.3
8-10
Assumptions regarding future mortality are based on published statistics and mortality tables.
189
16 Share capital
2014
2013
Par value Number
Number
per share of shares Amount of shares Amount
(in Baht)
Authorised
At 1 January
- ordinary shares
At 1 January
- ordinary shares
Reduction in par value
- from Baht 100 to Baht 1
Issue of new shares
At 31 December
- ordinary shares
Issued and paid-up
At 1 January
- ordinary shares
At 1 January
- ordinary shares
Reduction in par value
- from Baht 100 to Baht 1
Issue of new shares
At 31 December
- ordinary shares
(thousand shares/thousand Baht)
1
1,300,000
1,300,000
-
-
100
-
-
10,000
1,000,000
1
1
-
-
1,000,000
300,000
1,000,000
300,000
1
1,300,000
1,300,000
1,300,000
1,300,000
1
1,000,000
1,000,000
-
-
100
-
-
10,000
1,000,000
1
1
300,000
300,000
1,000,000
-
1,000,000
-
1
1,300,000
1,300,000
1,000,000
1,000,000
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and
are entitled to one vote per share at meetings of the Company.
190
Annual Report 2014
Reduction of par value and increase in authorised share capital
At the extraordinary meeting of the shareholders of the Company held on 3 July 2013, the
shareholders approved the reduction of the par value from Baht 100 to Baht 1 and the increase in
the authorised share capital of Baht 300 million (from Baht 1,000 million to Baht 1,300 million) by
issuing 300 million ordinary shares at Baht 1 par value for the Initial Public Offering (“IPO”). The
Company registered the par value reduction and the capital increase with the Ministry of Commerce
on 11 July 2013, and approved the listing of its ordinary shares on the Stock Exchange of Thailand.
Initial public offering
In April 2014, the Company offered its ordinary shares to the initial public offering (“IPO”) by issuing
300 million common shares. The new shares were sold to the subscribers at a price of Baht 13 per
share (Baht 1 paid in capital and Baht 12 share premium) totalling Baht 3,900.0 million (share
premium of Baht 3,600.0 million). The Company registered the increase in paid-up share capital
with the Ministry of Commerce on 17 April 2014 and the shares of the Company began trading
in the Stock Exchange of Thailand on 21 April 2014. Expenses directly attributable to the initial
public offering amounting to Baht 84.6 million were debited to the share premium associated with
the IPO (share premium - net of Baht 3,515.4 million).
Share premium
Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription
monies received in excess of the par value of the shares issued to a reserve account (“share
premium”). Share premium is not available for dividend distribution.
Share-based payments
In November 2013, management was informed that a major shareholder of the Company had
entered into agreements for the sale and purchase of a portion of his personally owned shares
with employees and had granted the rights to acquire his personally owned shares to a group
of business partners during the period 2010 to 2013 for consideration equivalent to share par
value. The grant dates are the same as the exercise dates. These transactions are considered to
be share-based payment transactions. Therefore, the Company is required to measure the fair
value of the employees’ and business partners’ rights to acquire the shares at grant dates based
on the underlying fair value of the shares and the consideration payable and to recognise related
expenses, with a corresponding increase in equity in accordance with TFRS 2.
The estimated fair values of each share at the grant dates were based on calculations performed
by a qualified independent valuer using the Discounted Cash flows model (DCF) excluding expected
dividends that were incorporated into the measurement of fair value. The key financial assumptions
used were the Weighted Average Cost of Capital (WACC) rates of 10% to 13% per annum, the Terminal
Growth rate at 3% per annum and sales growth rate which was calculated from the Compounded
Annual Growth Rate (CAGR) of tea market during the years 2009 to 2012.
191
The fair value of the shares and exercise price at the grant dates and total number of shares in
each year were as follows:
Grant date
Fair value Exercise price
(in Baht)
1 October 2010 - 31 December 2010
1 January 2011 - 31 December 2011
1 January 2012 - 31 December 2012
1 January 2013 - 21 May 2013
0.7
0.7
5.6
9.5
1
1
1
1
Number of
shares
(in thousand shares)
8,144
59,664
9,416
1,502
In July 2013, the Company had decreased the par value of the Company’s shares. Consequently,
the Company has restated the par value of ordinary shares from Baht 100 to Baht 1 to use in the
computation of fair value, assuming the reduction in par value occurred at the beginning.
The Company has recognised the related expenses in the financial statements for the year ended
31 December 2013 amounting to Baht 12.8 million as “employee benefit expenses and expenses
for share-based payment transactions with business partners” with a corresponding increase in
equity as “surplus on share-based payment transactions” at the same amount.
17Reserves
Reserves comprise:
Appropriations of profit and/or retained earnings
Legal reserve
Section 116 of the Public Companies Act B.E. 2535 requires that a public company shall allocate
not less than 5% of its annual net profit, less any accumulated losses brought forward, to a reserve
account (“legal reserve”), until this account reaches an amount not less than 10% of the registered
authorised capital. The legal reserve is not available for dividend distribution.
Currency translation differences
The currency translation differences account within equity comprises all foreign currency differences
arising from the translation of the financial statements of foreign operations.
192
Annual Report 2014
18 Segment information
Reportable segment
Management considers that the Company operates in a single line of business, namely the Beverage
business, and has, therefore, only one reportable segment.
Geographical information
Management considers that the Company is managed and operates principally more than 99%
in Thailand. There is no material revenues derived from, or assets located in, foreign countries.
Major customer
Revenues from one customer of the Company represents approximately Baht 5,090 million (2013:
Baht 4,935 million) of the Company’s total revenues.
19 Employee benefit expenses
Financial
statements in
which the
equity method
Separate
Note
Salaries and wages
transactions
Defined benefit plan
Defined contribution plan
Others
Total
16
15
2014
2014
(in thousand Baht)
167,843
167,843
2013
3,279
2,825
12,864
186,811
9,364
34
2,318
8,082
153,113
3,279
2,825
12,864
186,811
133,315
193
Defined contribution plan
The defined contribution plan comprise provident fund established by the Company for its
employees. Membership to the fund is on a voluntary basis. Contributions are made monthly by
the Company and employees each at the rates ranging from 2% to 5% of their employees’ basic
salaries. The provident fund is registered with the Ministry of Finance as juristic entity and is
managed by a licensed Fund Manager.
20 Expenses by nature
The statement of comprehensive income includes an analysis of expenses by function. Expenses
by nature disclosed in accordance with the requirements of various TFRS were as follows:
Financial
statements in
which the
equity method
Separate
Note
Included in cost of sale of goods:
Changes in inventories of finished goods
Raw materials and supplies
Depreciation and amortisation
Utility expenses
16
Distribution and transportation expenses
Others
Total
Included in selling expenses:
Advertising and sales promotion
expenses
Entrance and other service fees
Distribution and transportation expenses
Total
194
2014
2014
(in thousand Baht)
2013
(210,149)
3,445,493
358,520
203,857
102,841
43,691
120,951
4,065,204
(210,149)
3,445,493
358,520
203,857
102,841
43,691
120,951
4,065,204
96,827
3,669,722
256,021
161,059
78,889
61,419
101,093
4,425,030
705,507
36,139
32,534
774,180
705,507
36,139
32,534
774,180
889,966
9,822
31,403
931,191
Annual Report 2014
Note
Included in administrative expenses:
Impairment loss
transactions with business partners
Education, sports and other donations
Depreciation and amortisation
Others
Total
Financial
statements in
which the
equity method
Separate
2014
2014
(in thousand Baht)
2013
11
16
121,495
83,640
121,495
83,640
73,993
16
1,130
11,395
32,758
250,418
1,130
11,395
32,758
250,418
3,203
5,643
11,130
36,379
130,348
21 Finance costs
Note
Interest expense:
Related parties
Financial institutions
Total interest expense
Transaction costs and others
Total
Less amounts included in the cost of
qualifying assets
-Property, plant and equipment
under construction
Net
Financial
statements in
which the
equity method
Separate
2014
2014
(in thousand Baht)
2013
4
11,726
103,098
114,824
330
115,154
11,726
103,098
114,824
330
115,154
42,096
125,093
167,189
231
167,420
10
(15,739)
99,415
(15,739)
99,415
(5,802)
161,618
195
22 Income tax
Income tax recognised in profit or loss
Financial
statements in
which the
equity method
Separate
Note
2014
Current tax expense
Current year
Deferred tax expense
Movements in temporary differences
Tax loss carry forward
Total
2014
(in thousand Baht)
2013
-
-
-
(25,275)
(33,812)
(59,087)
(25,275)
(33,812)
(59,087)
-
12
Income tax recognised in other comprehensive income
Financial
statements in
which the
equity method
Separate
Note
Defined benefit plan actuarial losses
Total
196
12
2014
2014
(in thousand Baht)
(400)
(400)
(400)
(400)
2013
-
Annual Report 2014
Reconciliation of effective tax rate
Financial statements
In which the equity
method is applied
Rate
(%)
Income tax using the Thai corporation tax rate
Income not subject to tax
Expenses not deductible for tax purposes
Expenses that are deductible for tax purposes
Recognition of previously unrecognised tax losses
Total
20
(6)
2014
(in thousand
Baht)
1,019,674
203,935
(169,444)
1,621
(17,631)
(77,568)
(59,087)
Rate
(%)
Income tax using the Thai corporation
tax rate
Income not subject to tax
Expenses not deductible for tax purposes
Recognition of previously unrecognised
tax losses
Unrecognised tax losses
Total
(6)
2014
(in thousand
Baht)
1,019,647
2013
Rate (in thousand
(%)
Baht)
883,655
(169,438)
1,621
(17,631)
(196,247)
5,977
-
(77,568)
(59,087)
13,539
-
-
197
Income tax reduction
Royal Decree No. 530 B.E. 2554 dated 21 December 2011 grants a reduction in the corporate income
tax rate for the three accounting periods 2012, 2013 and 2014; from 30% to 23% for the accounting
period 2012 which begins on or after 1 January 2012 and to 20% for the following two accounting
periods 2013 and 2014 which begin on or after 1 January 2013 and 2014, respectively. Royal Decree
No. 577 B.E. 2557 dated 10 November 2014 extends the reduction to 20% for the accounting period
2015 which begins on or after 1 January 2015.
The Company has applied the reduced tax rate of 20% in measuring deferred tax assets and liabilities
as at 31 December 2014 and 2013 in accordance with the clarification issued by the FAP in 2012.
23 Promotional privileges
By virtue of the provisions of the Industrial Investment Promotion Act of B.E. 2520, the Company
has been granted privileges by the Board of Investment relating to manufacture of beverages from
plants, vegetables or fruits in pack. The privileges granted include:
(a) exemption from payment of import duty on machinery approved by the Board;
(b) exemption from payment of corporate income tax on net profit of the promoted business for
certain periods and conditions as stipulated in the promotional certificates; and
(c) exemption to include the dividend income from the promoted business in the computation
of corporate income tax throughout the period the Company being granted exemption.
As promoted companies, the Company must comply with certain terms and conditions prescribed
in the promotional certificates.
Summary of revenue from promoted and non-promoted businesses:
2014
2013
NonNonPromoted promoted
Promoted promoted
businesses businesses Total businesses businesses Total
Local sales
Export sales
Total revenue
198
4,587,397
17,788
4,605,185
(in thousand Baht)
1,572,080 6,159,477
4,692,375
1,815
19,603
16,681
1,573,895 6,179,080
4,709,056
1,763,903 6,456,278
11,416
28,097
1,775,319 6,484,375
Annual Report 2014
24 Basic earnings per share
The calculations of basic earnings per share for the years ended 31 December 2014 and 2013 were
based on the profit for the years attributable to ordinary shareholders of the Company and the
weighted average number of ordinary shares outstanding during the years as follows:
Financial
statements in
which the
equity method
Separate
is applied
2014
Profit attributable to ordinary shareholders
of the Company (basic)
Number of ordinary shares outstanding
at 1 January
Effect of shares issued during the year
Weighted average number of ordinary
shares outstanding (basic)
Earnings per share (basic) (in Baht)
2014
(in thousand Baht)
2013
1,078,761
1,078,734
883,655
1,000,000
212,877
1,000,000
212,877
1,000,000
-
1,212,877
1,212,877
1,000,000
0.89
0.89
0.88
25Dividends
At the meeting of the Board of Directors of the Company held on 13 August 2014, the Board of
Directors approved the appropriation of interim dividend of Baht 0.50 per share, amounting to Baht
650 million. The dividend was paid to shareholders on 12 September 2014.
26 Financial instruments
Financial risk management policies
The Company is exposed to normal business risks from changes in market interest rates and
currency exchange rates and from non-performance of contractual obligations by counterparties.
The Company does not hold or issue derivative financial instruments for speculative or trading
purposes.
199
Risk management is integral to the whole business of the Company. The Company has a system of
controls in place to create an acceptable balance between the cost of risks occurring and the cost
of managing the risks. The management continually monitors the Company’s risk management
process to ensure that an appropriate balance between risk and control is achieved.
Capital management
The Board of Directors’ policy is to maintain a strong capital base so as to maintain investor, creditor
and market confidence and to sustain future development of the business. The Board monitors the
return on capital, which the Company defines as result from operating activities divided by total
shareholders’ equity, and also monitors the level of dividends to ordinary shareholders.
Interest rate risk
Interest rate risk is the risk that future movements in market interest rates will affect the results of
the Company’s operations and its cash flows. The Company is primarily exposed to interest rate
risk from its borrowings (note 13 to the financial statements).
The effective interest rates of interest-bearing financial liabilities as at 31 December and the periods
in which those liabilities mature were as follows:
method is applied /
After 1 year
Within but within After
Interest rate 1 year 5 years 5 years Total
(% per annum)
2014
Current
Short-term loans from
Current portion of
long-term loans
200
Market rate
6 months
BIBOR plus
1.25
(in thousand Baht)
28,224
-
-
28,224
153,841
-
-
153,841
Annual Report 2014
method is applied /
After 1 year
(% per annum)
Non-current
Long-term loans from
Total
(in thousand Baht)
MLR minus
2.625, MLR
minus 2 and
MLR minus
2.12 and
6 months
BIBOR plus
1.25
182,065
1,672,672
1,672,672
107,765 1,780,437
107,765 1,962,502
method is applied /
After 1 year
(% per annum)
2013
Current
Short-term loans from
Current portion of
long-term loans
(in thousand Baht)
Market rate
355,826
-
-
355,826
MLR minus
2.37 and
6 months
BIBOR plus
1.25
230,805
-
-
230,805
201
method is applied /
After 1 year
(% per annum)
Non-current
related parties
Total
MLR minus
2.37, MLR
minus 2.12
and 6 months
BIBOR plus
1.25
4
(in thousand Baht)
-
1,757,117
593,813
2,350,930
586,631
1,000,000
2,757,117
- 1,000,000
593,813 3,937,561
Management believes that such interest rate risk is minimal.
Foreign currency risk
The Company is exposed to foreign currency risk relating to purchase and sale which are
denominated in foreign currencies. However, as at 31 December 2014 and 2013 the Company does
not have material foreign currency risk.
202
Annual Report 2014
At 31 December, the Company was exposed to foreign currency risk in respect of financial assets
and liabilities denominated in the following currencies:
Note
United States Dollars
Payables on purchase of
property, plant and equipment
Japanese Yen
Payables on purchase of property,
plant and equipment
exposure
14
Financial
statements in
which the
equity method
Separate
is applied
2014
2014
(in thousand Baht)
2013
34,314
34,314
-
9,707
44,021
9,707
44,021
23,720
23,720
150
150
150
150
44,782
44,782
44,171
44,171
68,502
Credit risk
Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to
settle its financial and contractual obligations to the Company as and when they fall due.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing
basis. Credit evaluations are performed on all customers requiring credit over a certain amount.
At the reporting date there were no significant concentrations of credit risk. The maximum exposure
to credit risk is represented by the carrying amount of each financial asset in the statement of
financial position. However, management does not anticipate material losses from its debt collection.
Liquidity risk
The Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed
adequate by management to finance the Company’s operations and to mitigate the effects of
fluctuations in cash flows.
203
Denomination of fair values
The fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction. Since the majority of the financial
assets and liabilities classified as short-term and loans are bearing interest at rates based on current
market rates, the management believes that at 31 December 2014 and 2013, the carrying value
of the Company’s financial statements does not materially differ from their aggregate fair value.
27 Commitments with non-related parties
Financial
statements in
which the
equity method
is applied
2014
Capital commitments
Contracted but not provided for:
Total
2014
(in thousand Baht)
307,691
307,691
Financial
statements in
which the
equity method
is applied
2014
Non-cancellable operating lease
commitments
Within one year
After one year but within five years
Total
204
Separate
307,691
307,691
1,081,176
1,081,176
Separate
2014
(in thousand Baht)
19,054
2013
13,918
5,136
19,504
2013
15,073
13,375
28,448
Annual Report 2014
The Company has lease agreements with local companies covering office premises including
facilities and others for periods of 1 to 4 years expiring in 2015 to 2016.
Financial
statements in
which the
equity method
is applied
2014
Other commitments
Unused letters of credit
Purchase orders for goods and supplies
Total
426,516
Separate
2014
(พันบาท)
369,257
57,259
426,516
2013
886,114
135,143
1,021,257
Letter of guarantee
The Company had commitment to a financial institution for letter of guarantee issued by the financial
institution in favor of a state enterprise of Baht 5.5 million (2013: Baht 5.5 million).
Significant agreements with non-related parties
Supply agreements
The Company has supply agreements with local companies. Under the terms of the agreements,
the Company agrees to purchase raw material for production of packaging according to the
quantity required at the price specified in the agreements. These agreements shall be in effect
until 31 December 2016 with the renewal option.
Product distribution agreements
The Company has two production distribution agreements with two local companies. Under the
terms of the agreements, the Company agrees to pay distribution fees at the rates as specified in
the agreements. The first agreement shall be in effect from 1 February 2011 to 31 January 2016 and
is renewable automatically for another 3 years. The contractual parties have a right to terminate
the agreement by giving advance notice of not less than 6 months prior to the expiration of the
agreement. The second agreement shall be in effect from 1 November 2014 to 31 October 2017.
Natural gas purchase agreement
The Company has a natural gas purchase agreement with a local company. Under the terms of the
agreement, the Company agrees to pay disbursements and comply with conditions as specified
in the agreement. The agreement shall be in effect from 5 September 2011 to 31 August 2018 and
is renewable by giving advance written notice of not less than 90 days prior to the expiration of
the agreement.
205
Domestic transportation services agreement
The Company has a domestic transportation services agreement with a local company. Under the
terms of the agreement, the Company agrees to pay disbursements and comply with conditions as
specified in the agreement. The agreement shall be in effect from 1 April 2014 to 31 March 2019 and
is renewable automatically for another 5 years. The contractual parties have a right to terminate
the agreement by giving advance notice of not less than 6 months prior to the expiration of the
agreement.
28 Events after reporting period
At the meeting of the Board of Directors of the Company held on 25 February 2015, the Board of
Directors approved the appropriation of annual dividend for the year 2014 of Baht 1.0 per share,
amounting to Baht 1,300 million, which is included the interim dividend paid to shareholders
on 12 September 2014 of Baht 0.50 per share, amounting to Baht 650 million. Consequently, the
remaining dividend of Baht 0.50 per share, amounting to Baht 650 million, is scheduled to be paid
to the Company’s shareholders on 25 May 2015. The annual dividend, however, is subject to the
final approval from the shareholders of the Company.
29 Thai Financial Reporting Standards not yet adopted
A number of new and revised TFRS have been issued but are not yet effective and have not been
applied in preparing these financial statements. Those new and revised TFRS that may be relevant
to the Company’s operations, which become effective for annual financial periods beginning on or
after 1 January 2015. The Company does not plan to adopt these TFRS early.
TFRS
206
Topic
Presentation of Financial Statements
Inventories
Statement of Cash Flows
Accounting Policies, Changes in Accounting
Estimates and Errors
Events after the Reporting Period
Income Taxes
Property, Plant and Equipment
Leases
Revenue
Year
effective
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
Annual Report 2014
Topic
Year
effective
Employee Benefits
The Effects of Changes in Foreign Exchange Rates
Borrowing Costs
2015
2015
2015
Related Party Disclosures
Separate Financial Statements
Investments in Associates and Joint Ventures
Earnings per Share
Interim Financial Reporting
Impairment of Assets
Provisions, Contingent Liabilities and Contingent
Assets
Intangible Assets
Share-based Payment
Non-current Assets Held for Sale and Discontinued
Operations
Operating Segments
Consolidated Financial Statements
Joint Arrangements
Disclosure of Interests in Other Entities
Fair Value Measurement
Operating Leases - Incentives
Income Taxes - Changes in the Tax Status of an
Entity or its Shareholders
Evaluating the Substance of Transactions
Involving the Legal Form of a Lease
Revenue - Barter Transactions Involving
Services Advertising
Changes in Existing Decommissioning,
Restoration and Similar Liabilities
2015
2015
2015
2015
2015
2015
2015
TFRS
TFRS 10
TFRS 11
TFRS 12
TFRS 13
TSIC 15 (revised 2014)
TFRIC 1 (revised 2014)
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
207
TFRS
TFRIC 4 (revised 2014)
Topic
Determining whether an Arrangement contains
a Lease
TFRIC 10 (revised 2014) Interim Financial Reporting and Impairment
TFRIC 13 (revised 2014) Customer Loyalty Programmes
Year
effective
2015
2015
2015
2015
The Company has made a preliminary assessment of the potential initial impact on the financial
statements in which the equity method is applied and separate financial statements of these new
and revised TFRS and expects that there will be no material impact on the financial statements in
the period of initial application.
208
2922/301-303 28th Floor. Charn Issara II Bldg., New Petchburi Rd., Bangkapi, Huaykwang, Bangkok 10310

- Ichitan Group

Transcription

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