Sappe Public Company Limited Annual Report 2020 A 2020 when innovation and resilience come together Sappe Public Company Limited B Annual Report 2020 INNO-RESILIENCE อาจจะสะ券ุ券แ噈่เราจะไ虈่ยอ虈หยุ券สร้างสรรቌ์ Sappe Public Company Limited Annual Report 2020 1 CONTENTS 5 Vision and Mission 6 Message from Chairman of the Board and Chief Executive Officer 8 Financial Highlights 20 Board of Directors 21 Significant Changes and Developments in 2020 25 Company Information 29 Shareholding Structure 31 Dividend Payment Policy 32 Nature of Business Operations Sappe Public Company Limited 2 Annual Report 2020 42 Risk factors 46 Management Structure 73 Corporate Governance 88 Corporate Social Responsibility 93 Internal Control and Risk Management 97 Connected Transactions 107 Management’s Discussion and Analysis 113 Report of the Board of Directors’ Responsibilities to Financial Reporting 114 Auditor’s Report 119 Financial Statements Sappe Public Company Limited Annual Report 2020 3 เราจะทำาให้ชีวิ噈ของผู้ቌน券ีขึ้น ผ่านจิ噈วิญญาณที่สร้างสรรቌ์ของเรา We better people’s lives through our innovative spirit Sappe Public Company Limited 4 Annual Report 2020 VISION & MISSION Vision Mission “Becoming the preferred and trusted “Be an inspiring Thai model global brand driven by a team of organization delivering superior passionate and synergistic top talents choices of food & beverages passionately working happily together to better people’s lives.” in a dynamically innovative workplace.” Sappe Public Company Limited Annual Report 2020 5 Over the past year, we have continued to innovate health and beauty food and beverages, as well as expanded the market through new formats of distribution channels both domestically and internationally. Despite the challenges of exporting products to foreign countries and domestic lockdown measures, the growth of domestic functional drink products has become significantly prominent due to the adjustment of production plan to meet changing consumers’ needs in a timely manner. As a result, in December, the company was able to gain 45.8% market share with the increases in both domestic, 45% of total revenue, and international sales (55% of total revenue) over 90 countries. The company gained 45.8% market share with increase in both domestic and international sales. >90 COUNTRIES MESSAGE FROM CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER Despite the Covid-19 pandemic crisis, we never stop developing new products to meet consumers’ Although 2020 may not be the happiest needs toward health-conscious products. Healthy drinks such as “Gumi Gumi Jelly” and “B’lue year for everyone, it was one of the most Vitamin Jelly” with high vitamin C to boost immunity enjoyable and creative years for us. Our and to fight free radicals as well as B’lue, fruit journey in 2020 was very challenging flavored vitamin water, constantly launched to the because we all faced dramatic situation market. This also includes new product under fruit juice drink category, “Mogu Mogu Ice Burst”, the and changes that severely affect people’s first fruit juice mixed with coconut jelly in the format lives and the global economy. The of snowflake ice cream available in 2 flavors, Lychee Covid-19 pandemic has been a big wave and Strawberry. This ice burst comes with an exotic of change allowing us to learn to adapt, taste in a ready-to-eat package, which can be stored at ambient temperature and becomes snowflake to be patient, and to never give up, so we ice cream when storing in the freezer. can get through the hard times together. Sappe Public Company Limited 6 Annual Report 2020 Our success has come from strong supports from stakeholders, management team, employees, as well as trade partners through the mutual belief that “We better people’s lives through our innovative spirit”. Through the process of co-thinking, co- creating and non-stop overcoming the challenges together in a space, called “Sappe, Home of Innovators”, all Sappe innovators work with joy to create new approaches and ideas through various activities and trainings, helping promote work collaboration and improve skills, resulting the best outcomes in terms of quality of work and quality of life. We will continue to develop and deliver reliable, unique, innovative, safe and high-quality products to meet consumers’ needs. We restructured the sales function to maintain growth by expanding marketing channels through higher penetration into the local traditional trade channel nationwide, through 360 degrees offline and online platforms, including the Market place, TV Direct sales, and Social Media to respond to the dynamic changes of consumers’ behaviors. This also included the differentiation of marketing communication campaigns in the form of brand collaboration with business partners, such as the B’lue x Free Fire campaign expanding to the gaming market and creating consumer base of new On behalf of the Board of Directors, executives, generation during work from home period, ALL and all employees, we would like to thank all COCO x The Coffee Club, a premium Café chain, shareholders, investors, customers, communities, ALL COCO x YOU & I, a premium Shabu restaurant media partners, and business partners who chain, to offer consumers unique consumption have always trusted and supported us to grow experience, creating stronger brand awareness steadily. We will strive to the fullest to develop our and maintaining positions of a leading innovative organization, to grow sales, to maintain market food and beverage company and of No.1 Thai brand share and to expand the market both domestically in the hearts of consumers recognized locally and and internationally, while constantly conducting globally. the business in consideration of communities and society, environmental and stakeholders’ interests. We will continue our journey on the challenging path. Even though we fall, we will never stop moving forward with stronger steps. We will do our best to deliver consumers happiness through our innovative products. Regardless the situation is, we will always get through it. Mr. Natee Onin Ms. Piyajit Ruckariyapong Chairman of the Board of Directors Director, Executive Committee, and Chief Executive Officer Sappe Public Company Limited Annual Report 2020 7 Statement of financial position - Consolidated financial statements 31-Dec-20 31-Dec-19 31-Dec-18 31-Dec-17 Statement of financial position million million million million % % % % baht baht baht baht ASSETS 3,647.16 107.59 3,389.97 100.00 2,922.91 100.00 2,758.41 100.00 Current assets 2,361.32 69.66 1,943.88 57.34 1,604.56 54.90 1,498.26 54.32 Cash and cash equivalent 194.39 5.73 181.70 5.36 172.64 5.91 155.68 5.64 Current investments 1,415.10 41.74 1,132.13 33.40 915.80 31.33 905.21 32.82 Trade accounts receivable 435.59 12.85 352.87 10.41 248.96 8.52 203.21 7.37 Other receivables 64.46 1.90 40.95 1.21 36.72 1.26 43.13 1.56 Short-term loans to related parties - - - - 8.00 0.27 8.00 0.29 Inventories 221.07 6.52 216.90 6.40 213.77 7.31 176.19 6.39 Other current assets 30.71 0.91 19.33 0.57 8.67 0.30 6.84 0.25 Non-current assets 1,285.84 37.93 1,446.09 42.66 1,318.35 45.10 1,260.15 45.68 Investment in associates 14.19 0.42 29.74 0.88 142.01 4.86 141.93 5.15 Other long-term investments - - 100.00 2.95 50.00 1.71 - - Property, plant and equipment 1,006.22 29.68 1,133.84 33.45 1,055.95 36.13 1,048.12 38.00 Right-of-use assets 96.76 2.85 Goodwill 90.90 2.68 90.90 2.68 - - - - Intangible assets other than goodwill 49.95 1.47 56.06 1.65 52.30 1.79 56.30 2.04 Deferred tax assets 18.31 0.54 14.96 0.44 12.79 0.44 9.40 0.34 Other non-current assets 9.51 0.28 20.59 0.61 5.30 0.18 4.40 0.16 LIABILITIES AND EQUITY 3,647.16 107.59 3,389.97 100.00 2,922.91 100.00 2,758.41 100.00 LIABILITIES 774.05 22.83 646.20 19.06 499.37 17.08 506.01 18.34 Current liabilities 670.50 19.78 602.71 17.78 482.47 16.51 493.00 17.87 Bank overdraft 1.46 0.04 - - 0.95 0.03 1.05 0.04 Trade accounts payable 217.94 6.43 182.08 5.37 176.34 6.03 168.60 6.11 Other payables 360.00 10.62 366.35 10.81 272.99 9.34 276.09 10.01 Current portion of long-term loans from 0.03 0.00 0.10 0.00 - - - - financial institutions Short-term loans from related parties 9.35 0.28 10.98 0.32 3.99 0.14 4.18 0.15 Current portion of finance lease liabilities 25.33 0.75 6.50 0.19 0.30 0.01 - - Current tax payable 56.39 1.66 36.70 1.08 27.90 0.95 43.08 1.56 Sappe Public Company Limited 8 Annual Report 2020 Statement of financial position - Consolidated financial statements 31-Dec-20 31-Dec-19 31-Dec-18 31-Dec-17 Statement of financial position million million million million % % % % baht baht baht baht Non-Current liabilities 103.55 3.05 43.49 1.28 16.90 0.58 13.01 0.47 Long-term loans from financial institution - 0.03 0.00 - - - - Finance lease liability 65.90 1.94 12.45 0.37 0.42 0.01 - - Deferred tax liabilities 2.91 0.09 2.57 0.08 - - - - Non-current provisions for employee benefit 27.61 0.81 20.30 0.60 12.43 0.43 8.75 0.32 Other non-current liabilities 7.13 0.21 8.14 0.24 4.05 0.14 4.26 0.15 EQUITY 2,873.11 84.75 2,743.77 80.94 2,423.54 82.92 2,252.40 81.66 Issued and paid-up share capital 304.38 8.98 304.38 8.98 304.37 10.41 303.08 10.99 Share premium on ordinary shares 975.61 28.78 975.61 28.78 975.34 33.37 956.75 34.68 Warrant 27.80 0.82 20.93 0.62 9.07 0.31 1.93 0.07 Retained earnings - Legal reserve 30.84 0.91 30.84 0.91 30.84 1.06 30.46 1.10 Retained earnings - Unappropriate 1,433.30 42.28 1,312.46 38.72 1,109.71 37.97 968.55 35.11 Difference arising from common control (4.37) (0.13) (4.37) (0.13) (4.36) (0.15)