Oishi Group Public Company Limited | Annual Report 2013
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ANNUAL REPORT 2013 Enrich your life with the best by ... OISHI OISHI GROUP PUBLIC COMPANY LIMITED OISHI GROUP PLC. ANNUAL REPORT 2013 C O N T E N T S PAGE 1. MESSAGE FROM THE CHAIRMAN 1 2. GENERAL INFORMATION 2 3. FINANCIAL SUMMARY 4 4. EXECUTIVE SUMMARY 6 5. THE BOARD OF DIRECTORS AND THE EXECUTIVES 7 6. BUSINESS NATURE 16 7. RISK FACTORS 22 8. BUSINESS OPERATIONS 25 9. BUSINESS ASSETS 34 10. LEGAL DISPUTES 39 11. CAPITAL STRUCTURE 40 12. MANAGEMENT STRUCTURE 42 13. INFORMATION ON THE BOARD OF DIRECTORS AND THE EXECUTIVES 55 14. SHARE OWNERSHIP OF THE BOARD OF DIRECTORS AND THE EXECUTIVES 83 15. REMUNERATION 84 16. INTERNAL INFORMATION USAGE 87 17. HUMAN RESOURCES 88 18. INTERNAL CONTROL 91 19. RELATED PARTIES TRANSACTIONS 92 20. FINANCIAL STATUS AND THE COMPANY’S PERFORMANCE 101 21. OTHER RELATED INFORMATION 106 22. REPORT OF THE BOARD OF DIRECTORS’ RESPONSIBILITY 107 FOR THE FINANCIAL STATEMENTS 23. REPORT OF THE AUDIT COMMITTEE 109 24. REPORT OF THE RISK MANAGEMENT COMMITTEE 113 25. REPORT ON THE GOOD CORPORATE GOVERNANCE 115 26. CORPORATE SOCIAL RESPONSIBILITY REPORT 129 27. FINANCIAL STATEMENTS 139 1 OISHI GROUP PLC. ANNUAL REPORT 2013 1. MESSAGE FROM THE CHAIRMAN In 2013, despite the sluggish economy domestically and internationally, Oishi Group Public Company Limited still maintained satisfactory performance. Total sales revenue was 12,208 million Baht, an increase of 574 million Baht or 4.9% from last year. Net profit was 456 million Baht or 3.7% of total sales revenue. The net profit incorporated an extraordinary item, which was the adjustment of insurance claim receivable and acknowledgement of loss from flood in Profit and Loss Statement of 99 million Baht. In order to compete effectively in the competitive environment in both food and beverage businesses, the Company enhanced competitiveness by focusing more on human resource development, efficient cost management, R&D, new product development as well as state of the art manufacturing technology. To support business expansion and cost management initiatives, the Company has opened new Cold Aseptic production line 2 at Amphur Wangmuang, Saraburi province in March 2013, started the operation of the new world-class central kitchen in Amphur Ban Bueng, Cholburi province in the fourth quarter 2013, and approved to invest in Cold Aseptic production line 3 at Navanakorn Industrial Estate which is expected to begin production in December 2014. In 2013, the Company has conducted research and developed new products in both food and beverage sectors to better serve consumers’ needs and satisfactions. There were various new beverage products launched including Oishi Lychee flavored green tea, Oishi Fruito three new flavors and Oishi Matcha latte green tea. For food business, there were new favors of Oishi sandwich and Oishi Gyoza to excite the market. Also, the restaurant outlet expansion strategy in the prime areas was successfully implemented with 43 new outlets, bringing the total restaurant outlets to be 193 at the end of 2013. In 2014, the Company plans to open 45 new restaurant outlets. The Company’s corporate credit rating has been maintained at A-/Stable by TRIS and our debenture’s rating receives the same rating as corporate’s, representing stability of the Company’s financial position. As the Chairman of the Board, I assure the shareholders that the Board of Directors and the management team are determined to grow the businesses and maintain the market leading position in both food and beverage businesses via Thai Beverage Group’s production and distribution strengths, which will enable us to continuously expand the businesses domestically and internationally. Narong Srisa-an Chairman 2 GENERAL INFORMATION ANNUAL REPORT 2013 2. GENERAL INFORMATION The Company Name : Oishi Group Public Company Limited (the ”Company”) Business Type : Japanese restaurants and Green Tea under the brands, “Oishi”, “Fruito”, Sparkling Green Tea under the brand, “Chakulza”, and RTD Drink under the brand, “Fruitza” Company Registration Number : 0107547000150 Headquarter Location : 19th - 20th Floor, PARK VENTURES ECOPLEX 57 Wireless Road, Lumpini, Pathumwan, Bangkok 10330. Homepage : www.oishigroup.com Telephone Number : (02) 785-8888 Fax Number : (02) 785-8889 Registered Capital : Baht 375,000,000 Paid-up Capital : Baht 375,000,000 Type of Stock : Common Stock Paid-up Common Stock : 187,500,000 shares Par value : Baht 2 Trading Symbol on the Stock Exchange of Thailand : OISHI for ordinary shares Trading Symbol on the Thai Bond Market Association (TBMA) : OISHI168A for Debentures No. 1/2013 due 2016 3 OISHI GROUP PLC. ANNUAL REPORT 2013 REFERENCE Share Registrar : Legal Consultant : Thailand Securities Depository Company Limited Weerawong, Shinnawat & Piengpanor Company Limited No. 62 Stock Exchange of Thailand Building, No. 540 Mercury Tower, 22nd floor, Ploenjit, 4th, 6th and 7th floor, Rachadabhisek Road, Lumpini, Pathumwan, Bangkok 10330 Klongtoey, Bangkok 10110 Tel. (02) 264-8000 Tel. (02) 229- 2800 Mr. Mahin Kraivixien Thai Beverage Public Company Limited Debenture Registrar : No. 14 Vibhavadi - Rungsit Road, Chompol, Debentures of Oishi Group Public Company Limited Chatuchak, Bangkok 10900 No.1/2013 due 2016 Tel. (02) 785-5251 Siam Commercial Bank Public Company Limited No. 9, Rachadabhisek Road, Chatuchak, Investor Relations : Chatuchak, Bangkok 10900 Ms. Karnjaporn Kittiampanont Tel. (02) 544-2923 No. 57 PARK VENTURES ECOPLEX, 19th floor, Wireless Road, Lumpini, External Auditor : Pathumwan, Bangkok 10330 KPMG Phoomchai Audit Company Limited Tel. (02) 785-8888 No. 195 Empire Tower, 50th- 51th floor, E-mail : [email protected] South Sathorn Road, Yannawan, Sathorn, Bangkok 10120 Tel. (02) 677-2000 FINANCIAL SUMMARY 5 OISHI GROUP PLC. ANNUAL REPORT 2013 3. FINANCIAL SUMMARY Summary of financial status and company’s performance at 31 December Consolidated (Baht’000)(Baht’000) 22013013 22012012 2 2011011 Total assets 7,907,771 7,260,025 5,718,797 Total liabilities 4,499,343 4,138,831 2,813,951 Equities 3,408,428 3,121,194 2,904,846 Sales revenue 12,208,112 11,634,397 9,501,115 Total revenue 12,269,238 11,702,290 9,677,435 Net profit 455,572 653,833 808,127 Summary of Financial Ratios Consolidated (Baht’000(Baht’000)) 2013 2012 2011 Net profit / sales revenue (%) 3.73 % 5.62 % 8.51 % Return on equities (%) 13.95 % 21.70 % 28.93 % Return on assets (%) 6.01 % 10.08 % 15.39 % Earnings per share (Baht) 2.43 3.49 4.31 Dividend per share (Baht) 1.30 2.20 2.20 6 EXECUTIVE SUMMARY ANNUAL REPORT 2013 4. EXECUTIVE SUMMARY In 2013, the Company had sales revenue of 12,208 million baht, 5% increase from the previous year. This separates into sales revenue from beverage business 6,232 million baht or 1% decrease from the previous year and from food business 5,976 million baht or 12% increase from the previous year. Main reasons were the followings : 1. Intense competitions in RTD tea market. 2. Opening 43 new restaurant outlets and closing 5 non-performing outlets. Total outlets was 193 at yearend (including franchise). 2013 net profit was 456 million baht, 30% decrease from the previous year. The net profit incorporated an extraordinary item, which was the adjustment of insurance claim receivable and acknowledgement of loss from flood in Profit and Loss Statement of 99 million Baht. THE BOARDBOARD OFOF DIRECTORSDIRECTORS ANDAND THE EXECUTIVESEXECUTIVES 8 BOARD OF DIRECTOS AND THE EXECUTIVE ANNUAL REPORT 2013 5. THE BOARD OF DIRECTORS AND THE EXECUTIVES 5.1 The Board of Directors Mr. Narong Srisa-an Chairman of Board of Directors and Chairman of Remuneration Committee Education • Master of Arts (Economics) Honorary Degree, Thammasat University Mr. Thapana Sirivadhanabhakdi Vice Chairman of Board of Directors, Chairman of Executive Committee, Nomination Committee Member and Remuneration Committee Member Education • Bachelor of Business Administration (Finance), Boston University, U.S.A. • Master of Science Administration in Finance Economics, Boston University, U.S.A • Honorary Degree of Doctor of Philosophy, Department of General Management, Ramkhamhaeng University Mr. Vikrom Koompirochana Independent Director, Chairman of Audit Committee, Chairman of Nomination Committee and Remuneration Committee Member Education • B.A. (History), Chulalongkorn University (1966) • M.A. (History), Michigan State University, U.S.A. (1968) • Ph.D. (History), Michigan State University, U.S.A. (1978) • Honorary Degree in Humanities, Schiller International University (2003) 9 OISHI GROUP PLC. ANNUAL REPORT 2013 Ms. Potjanee Thanavaranit Independent Director and Audit Committee Member Education • Bachelor Degree in Accounting, Chulalongkorn University • Master of Business Administration (MBA), Syracuse university U.S.A. (USAID Scholarship) Mr. Chai Jroongtanapibarn Independent Director, Audit Committee Member and Chairman of Risks Management Committee Education • Bachelor Degree in Accounting, Chulalongkorn University • Master Degree in Accounting, Thammasat University Mr. Prasit Kovilaikool Independent Director, Nomination Committee Member and Remuneration Committee Member Education • LL.B (Second Class Honours), Chulalongkorn University • LL.M., Columbia University, New York, U.S.A. • Doctor of Jurisdical Science Program in Laws (Honorary Degree), Chulalongkorn University • Doctor of Jurisdical Science Program in Laws (Honorary Degree), Eastern Asia University • Admitted to Thai Bar Association 10 BOARD OF DIRECTOS AND THE EXECUTIVE ANNUAL REPORT 2013 Mr. Sithichai Chaikriangkrai Director, Vice Chairman of Executive Committee