Future Business Plan

Transcription

Future Business Plan
Annex 2
Future Business Plan
Current Business Overview
Serm Suk Public Company Limited (the “Company”) has engaged in beverage business as a
manufacturer and distributor. In addition, the Company also involves in packaging business of
PET bottle. The Company’s major business operations are categorized into 4 groups as follows:
1. Manufacture and distribute beverages, including
 Carbonated soft drinks under the brand: Pepsi, Pepsi Twist, Pepsi Max, Mirinda, SevenUp, Mountain Dew, and Club
 Ready-to-drink ice tea (lemon flavor), in returnable bottles under the brand: Lipton
 Sport drink under the brand Gatorade
 Tropicana Twister fruit juice (orange flavor), in returnable bottles
2. Manufacture and distribute product under the Company’s owned brand, including
 Drinking water under the brand: Crystal
 Soda water under the brand: Crystal
3. Distribute products, including
 Red Carabao for CarabaoTawandang Co., Ltd.
 Oishi ready-to-drink green tea for Oishi Trading Co., Ltd.
 Ready-to-drink ice tea in cans and PET bottles under the brand: Lipton for Pepsi Lipton
International Ltd.
 Tropicana Twister fruit juice, orange flavor, in non-returnable bottles for Pepsi-Cola
(Thai) Trading Ltd.
4. Manufacture and distribute packaging
 Manufacture and distribution of PET preform, PET bottles, and plastic closures through
Petform (Thailand) Co., Ltd.
Group Structure (for shareholding of 10% or more)
Group Structure
Serm Suk
Public Company Limited
%
Serm Suk Holdings Co., Ltd.
Shares holdings & investment
management
%
%
Petform (Thailand) Co., Ltd.
Manufacture & distribution of PET pre-form,
PET bottles, and plastic closures
%
Serm Suk Beverage Co., Ltd.
Manufacture & distribution
of beverages
As of 31 December 2010
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The Pet Co., Ltd.
Manufacture of plastic and
PET bottles
%
Petpack Co., Ltd.
Manufacture of plastic and PET
bottles
Financial Summary
Operating Performance
Sales and Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)
Unit: THB mm
19,694
19,257
18,725
16,846
14,844
1,258
1,217
1,138
992
924
9M 2009
Sales
9M 2010
EBITDA
From 2007 to 2009, the Company’s sales was THB 18,725 mm, THB 19,257 mm, and THB
19,694 mm, respectively. Sales growth was 2.8% and 2.3% in 2008 and 2009, respectively. For
the first nine-month periods in 2009 and 2010, the Company’s sales were THB 14,844 mm and
THB 16,846 mm, respectively or equivalent to sales growth of 13.5%.
Sales continues to increase driven by sales promotions and product launch in new sizes
emphasizing on value, despite facing challenges from change in the consumer behavior toward
other kind of beverages, including fruit juice, and competition from new players that attempt to
enter the market.
Gross Profit and Net Profit
6,000
26.11%
30.00%
5,000
26.11%
4,888
25.00%
4,000
20.00%
30.00%
15.00%
3,000
25.00%
10.00%
2,000
20.00%
5.00%
15.00%
1,000
0.00%
10.00%
-5.00%
0
5.00%
-10.00%
0.00%
4,888
26.11%
24.14%
24.14%
4,649
24.50%
4,825
24.50%
4,649
4,825
24.67%
24.67%
23.88%
23.88%
4,023
3,661
4,023
30%
Unit: THB mm
25%
20%
24.14%
24.50%
3,661
24.67%
23.88%
15%
1.75%
0.72%
1.79%
1.92%
2.70%
10%
1.75%
331
331
0.72%
140
140
1.79%
354
354
1.75%
0.72%
1.79%
Net profit
Gross profit
287
287
1.92%
1.92%
9M 2009
Net profit margin
459
459
5%
2.70%
2.70%
9M
9M 2010
2010
0%
Gross profit margin
-5.00%
From -10.00%
2007 to 2009, the Company’s gross profit was THB 4,888 mm, THB 4,649 mm, and THB
4,825 mm or equivalent to a gross profit margin of 26.1%, 24.1%, and 24.5%, respectively. For
the first nine-month periods in 2009 and 2010, the Company’s gross profit was THB 3,661 mm
and THB 4,023 mm or equivalent to a gross profit margin of 24.7% and 23.9%, respectively.
Decrease in gross profit for the year 2008 was due to the higher sugar price and labor wages.
However, the Company was able to maintain its gross profit margin at the level of around 24%
by implementing cost management of packaging materials.
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From 2007 to 2009, the Company’s net profit was THB 331 mm, THB 140 mm, and THB 354
mm, or equivalent to a net profit margin of 1.8%, 0.7%, and 1.8%, respectively. For the first
nine-month periods in 2009 and 2010, the Company’s net profit was THB 287 mm and THB 459
mm or equivalent to a net profit margin of 1.9% and 2.7%, respectively.
In 2008, the net profit margin decreased sharply due to the higher cost of goods sold mentioned
earlier; including the significant increase in oil price. In 2009, net profit margin improved due to
the decrease in the oil price. Moreover, the Company improved its logistic system to be more
efficient, and the Company further promotes products with high profitability into the market.
Return of Assets (ROA) and Return on Shareholders’ Equity (ROE)
5.5%
5.2%
4.7%
3.5%
3.6%
2.2%
3.5%
1.5%
9M 2010*
ROA
ROE
* Forecast full year revenue 2010. The decreasing figures are due to the increase in assets and shareholders’ equity of approx.THB
3,600 mm as a result of new appraisal value of land in Q3 2010
From 2007 to 2009, ROA was 3.5%, 1.5% and 3.6%, respectively. For the first nine-month
periods in 2010, ROA was 3.5%.
From 2007 to 2009, ROE was 5.2%, 2.2%, and 5.5%, respectively. For the first nine-month
periods in 2010, the ROE was 4.7%.
Financial Status
Assets, Liabilities and Equity
Unit: THB mm
13,240
9,435
6,316
3,119
9,989
9,766
9,224
6,388
6,227
3,378
2,996
3,251
9M 2010
Assets
Laibilities
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Equity
At the end of 2007 to 2009, the Company has total assets of THB 9,435 mm, THB 9,224 mm,
and THB 9,766 mm, respectively, which is equivalent to a growth rate of -2.2% and 5.9% in
2008 and 2009, respectively. At the end of the third quarter of 2010, the Company has total
assets of THB 13,240 mm. The considerable increase in the total assets was due to the change
in accounting policy on item “Land” from using cost method to new appraisal value revaluated by
independent appraiser. Consequently, the change caused the value of land in the consolidated
financial statement to increase by THB 3,624 mm.
At the end of 2007 to 2009, the Company has total liabilities of THB 3,119 mm, THB 2,996 mm
and THB 3,378 mm, respectively, or equivalent to a growth rate of -3.9% and 12.7% in 2008
and 2009 respectively. At the end of the third quarter of 2010, the Company has total liabilities
of THB 3,251 mm. In 2007 to 2009, accounts payable accounted for the major portion of the
Company’s liabilities, which equivalent to approximately 31% to 35% of the total liabilities.
Currently, the Company does not have any loan from financial institutions.
At the end of 2007 to 2009, the Company has total shareholders’ equity of THB 6,316 mm, THB
6,227 mm, and THB 6,388 mm, respectively, or equivalent to a growth rates are -1.4% and
2.6% in 2008 and 2009 respectively. At the end of the third quarter of 2010, the Company has
total shareholders’ equity of THB 9,989 mm. The significant increase in the total shareholders’
equity was due to the change in the land valuation method as mentioned earlier. Surplus on the
land revaluation was book in the shareholders’ equity.
Company’s Core Strength
1. Products manufactured and distributed by the Company are well-established
brand, which are:

Products manufactured and distributed by the Company: Carbonated soft drinks under
the Pepsi brand, which rank number one in market share in the cola soft drinks market in
Thailand, one of the few bottlers in the world that achieve larger market share than
“Coke”

Products under the Company’s owned brand: The Company has launched the drinking
water product under the Crystal brand since 1993, which Crystal drinking water was
highly successful because of its product quality, efficient distribution channels, well
customer service and effective marketing activations. Sales revenue of Crystal drinking
water has grown at the average of approximately 17.5% per annum (CAGR) from 2006
to 2010. However, the Company has limitation in creating its owned brand product due to
the condition of the current Exclusive Bottling Appointment with Pepsi Co Inc. and SevenUp (“Pepsi”) (“EBA between the Company and Pepsi”)

Products distributed by the Company: The Company has been the distributor of Red
Carabao and Oishi ready-to-drink green tea since 2002 and 2005, respectively. Sales of
Red Carabao and Oishi ready-to-drink green tea grew at the average of 13.4% and
22.3% per annum (CAGR) from 2006 to 2010
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2. Well-located manufacturing bases with sufficient capacity
Factories
Nakornsawan

State of the art manufacturing and
packing
factories
with
total
production capacity of 199.1 mm
raw case per year

Flexibilities in the production line in
adjusting production for each
product size

High yield and low waste

Each factory locates in important
regions to serve all catch areas
across the country
Nakornratchasrima
Pathumthani
Chonburi
Suratthani
3. Efficient distribution network
Warehouses
North East
13 warehouses
North
12 warehouses
3 sub-warehouses
Transportation

Huge fleets and river barges to
deliver products from factories,
located in all regions, to distribution
centers
Distribution Centers
South
4 warehouses
2 sub-warehouses
Bangkok/Central
18 warehouses
4 sub-warehouses

47
warehouses
and
9
subwarehouses dispersed across all
regions

Distribution of products through all
channels in traditional trade and
modern trade
Delivery of Product to Customers
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
1,400
route
sales
to
cover
distribution channels nationwide

Approximately 300,000 outlets such
as
wholesalers,
retailers,
convenience
stores,
restaurant,
quick serve food outlets, and
entertainment complex throughout
the country
4. Experienced and Proficient Management Team
Corporate Structure
Mr. Somchai Bulsook
President and CEO
Operation
• Mr. Dhitivute Bulsook
Director and General Plant Manager
(Pathumthani)
Working experience with SSC 17 years
Technical Engineering
• Mr. Somnuek Suvanich
Technical Director
Working experience with SSC 13 years
Sales and Marketing
Support
• Mr. Parinya Permpanich
Marketing and Sales Operation Director
• Mrs. Darunee Yindeepholcharoen
Acting Finance Director
Working experience with SSC 31 years
Working experience with SSC 4 years
• Mr. Arthakrit Visudtibhan
Human Resource Director
• Mr. Sin Kusri
General Plant Manager (Nakornsawan)
Working experience with SSC 8years
Working experience with SSC 39 years
• Mr. Kwanchai Mahapornprachak
General Plant Manager (Nakornratchasrima)
Working experience with SSC 3 years
Future Business Plan
Future business plan comprises 2 parts:- Business Operating Plan and Proceedings in Relation to
the Agreements Between the Company and Pepsi:
I. Business Operating Plan
1. Expansion on Non-Carbonated Soft Drinks (“Non CSD”)
The Company’s historical track record has proved that the Company is capable of offering
products with high-quality standard, providing good service, and responsive to customer
demands. Moreover, the Company is also capable to maximize the growth opportunity of
products / brand that meet customers demand through its efficient distribution network and
expanded customer base.
Due to the change in consumer behavior that moves toward more health concern, the noncarbonate soft drinks including, fruit juice, functional drinks, and etc., has shown increasing
popularity from the consumers. The Company acknowledges this opportunity and has a policy to
focus on potential and fast growing categories such as fruit juice, coffee, functional drinks, and
etc.
The expansion of market in non-carbonated soft drinks can be done by launching new products
to the market under the Company’s owned brand or the Company may acquire existing
successful products or brands in the market. The Company believes that these policies will
generate growth in sales for the Company in the future.
2. Expansion in Drinking Water Market Under the Brand Crystal
The Company has introduced Crystal drinking water since 1993, the first drinking water brand in
Thailand that has been certified by NSF, an international audit agency that inspects and certifies
quality standards of bottled drinking waters. Demand for Crystal drinking water increased sharply
in recent years accompanied by success factors of Crystal drinking water, such as its product
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quality, efficient distribution channels, well customer service and effective marketing activations,
these attributes contribute to sales revenue to show average growth of approximately 17.5% per
annum (CAGR) from 2006 to 2010.
Due to the continual growth in sales revenue of Crystal drinking water, the Company plans to
invest in additional drinking water line to ensure sufficient capacity to capture the higher growth
opportunity.
3. Distributor of Food and Beverage Products
By having an efficient distribution network, with 47 warehouses and 9 sub-warehouses in every
region and 1,400 route sales to cover wholesalers, retailers, convenience stores, restaurant,
quick serve food outlets, and entertainment complex throughout the country and as the
distributor of Red Carabao and Oishi ready-to-drink green tea that shown average growth in
sales revenue of approximately 13.4% and 22.3% per annum, respectively, this have proven
the Company’s distribution efficiency in delivering product to customers which have been widely
recognized by the market.
The Company plans to expand its product distribution beyond beverages to other type of
products, such as snack, food, and etc., through the current efficient distribution network.
4. Manufacturer of other Carbonated Soft Drinks products
The production and distribution of carbonated soft drinks is a large industry requiring modern
machinery for production, quality control, and efficient logistic for delivery of products to
customers nationwide.
The Company has been in the carbonated soft drink industry for more than 50 years and
equipped with modern manufacturing and bottling facility, good quality control, and efficient
distribution channel, which are the keys to success in carbonated soft drinks business. With the
Company’s experience and keys success factors, the Company proved to be the leader in the
cola soft drinks market, which is one of the few countries to obtain larger market share than
“Coke”.
The Company believes in its capability to manufactures and distributes carbonated soft drinks
under other brands that will further generate growth to the Company in the future. However, the
ability to manufacture and distribute carbonated soft drinks under other brands is subject to the
negotiation of the change in Exclusive Bottling Appointment (EBA) and Cooperative Advertising &
Marketing Agreementbetween the Company and Pepsi Group.
II. Proceedings in Relation to the Agreements Between the Company and Pepsi
The Special Board of Directors’ Meeting No. 2/2011 on Thursday, January 20, 2011 the
Board of Directors deemed it appropriate to propose that the Meeting of Shareholders
refuses to accept the proposals from Pepsi, which resulted from the negotiation to amend
commercial terms and contractual terms of the Agreements between the Company and
Pepsi, proposed on January 12, 2011 (“Pepsi’s Proposals”). The Company has not received
any additional proposal from Pepsi after the Working Committee delivered their comments
to Pepsi’s proposals. (The Company reported the summary of essence of Pepsi’s proposal
through the electronic source of the Stock Exchange of Thailand (ELCID) on January 21,
2011.) The Future Business Plan which includes proceeding with matters in relation to the
Agreements between the Company and Pepsi are as follows:
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1)
Enter into a new agreement with Pepsi in the form and substances that are reasonably
acceptable to the parties, the essence of which shall be as follows:
a)
It shall contain the formula for calculating the price of the concentrates, which results in
the price of the concentrates to drop 9% per year from the price under the present
EBA;
b) If Pepsi insists on preserving the right to terminate the agreement upon change of
control in the Company, there shall not be provisions regarding penalty or damages to
be incurred by the Company and the term “Control” shall have a definition which is clear
and generally acceptable;
c)
The Company shall not be subject to restriction on the production and sale of the
beverages under the Agreements with Pepsi, unless the beverages are of the same kind
and type and are in competition with each other, such as Cola;
d) With respect to other proposed Commercial Terms in relation to sale promotion and
marketing budget, Contractual Terms and Pepsi’s Requests, unless otherwise prescribed
under a) - c) or e) herein, shall be in accordance with Pepsi’s Proposals; and
e)
Other provisions and conditions must be reasonable, such as the period of a notice to
terminate the agreement, and the agreement shall not have provisions or conditions
which are not direct commercial points for the agreements of such nature, such as
provision on the right of Pepsi to appoint an executive, or provisions which are beyond
the control of the Company.
Further the Company must receive confirmation from Pepsi that it accepts to enter into
agreements that contain the aforementioned essences within 15 days from the date the
Meeting of Shareholders passes the resolution. The new agreements must be entered into
by March 31, 2011; and
2)
In the event that the Company does not receive confirmation from Pepsi that it agrees to
the provisions in clause 1) above within 15 days from the date the Meeting of Shareholders
passes the resolution, the Company shall terminate the Agreements between the Company
and Pepsi immediately. The termination shall be effective as the Board of Directors considers
appropriate but no later than 12 months from the date of such termination letter. The Board
of Directors of the Company or person, whom the Board of Directors designated, is
authorized, to proceed with the serving the termination letter and with other appropriate
actions in relation to the termination of the said agreements.
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