Annual Report 2015
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ANNUAL REPORT 2015 REPORT ANNUAL ANNUAL REPORT 2015 thaiunion.com COMPANY PROFILE Thai Union Group Public Company Limited Registration No. 0107537000891 Type of Business Processor and exporter of frozen and canned seafood Head Office 72/1 Moo 7, Sethakit 1 Road, Tarsrai Sub-district, Mueang Samut Sakhon District, Samut Sakhon Province 74000 Tel.: 66 (0) 3481-6500 (Automatic 7 Lines) Fax: 66 (0) 3481-6886 Bangkok Office 979/12 M Floor, S.M. Tower, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 Tel.: 66 (0) 2298-0024, 2298-0537 - 41 Fax: 66 (0) 2298-0548, 2298-0550 Investor Relations Tel.: 66 (0) 2298-0024 Department Fax: 66 (0) 2298-0342 Email: [email protected] Corporate Tel.: 66 (0) 2298-0024 Communications Fax: 66 (0) 2298-0024 ext. 4449 Department Email: [email protected] Websit thaiunion.com Listed on the Stock Exchange of Thailand sinceNovember 22, 1994 As of January 31, 2015 Registered capital THB 1,202,000,000 (4,808,000,000 shares) Paid-up capital THB 1,192,953,874 (4,771,815,496 shares) Par value THB 0.25 per share THAI UNION’S FOOTPRINT 1# premium canned sardine brand in Norway, US and Australia Svolvear, Norway Market Leader for Shelf-stable canned seafood in Germany 1# canned seafood brand in the UK, Ireland and the Netherlands Dingwall, UK Gniewino, 1# frozen seafood Poland importer and Sassnitz, Germany distributor in the US Liverpool, Bydgoszcz, Poland Quimper & UK Douarnenez Leading smoked France salmon in France and Paris, France Netherlands 1# canned tuna Shediac, brand in China Canada (by sales value) 2# tuna brand Portsmouth, in Italy El Segundo, New Hampshire Milan, Italy California ATLANTIC Peniche, New York San Diego, Portugal California OCEAN Shanghai, China Lyon, Georgia Long An, PACIFIC Dubai, UAE 3# canned Vietnam PACIFIC OCEAN seafood brand 1# premium in the US canned sardine OCEAN brand in France Hyderabad, India Bangkok, Thailand Tema, Ghana 1# canned Songkhla, Thailand seafood brands in France Mahe, Seychelles 1# canned tuna brand in Thailand CORPORATE OFFICE / SALES INDIAN OCEAN TU PRODUCTION PLANT INNOVATION CENTER / R&D CENTER JOINT VENTURE 1# premium canned sardine brand in Norway, US and Australia Svolvear, Norway Market Leader for Shelf-stable canned seafood in Germany 1# canned seafood brand in the UK, Ireland and the Netherlands Dingwall, UK Gniewino, 1# frozen seafood Poland importer and Sassnitz, Germany distributor in the US Liverpool, Bydgoszcz, Poland Quimper & UK Douarnenez Leading smoked France salmon in France and Paris, France Netherlands 1# canned tuna Shediac, brand in China Canada (by sales value) 2# tuna brand Portsmouth, in Italy El Segundo, New Hampshire Milan, Italy California ATLANTIC Peniche, New York San Diego, Portugal California OCEAN Shanghai, China Lyon, Georgia Long An, PACIFIC Dubai, UAE 3# canned Vietnam PACIFIC OCEAN seafood brand 1# premium in the US canned sardine OCEAN brand in France Hyderabad, India Bangkok, Thailand Tema, Ghana 1# canned Songkhla, Thailand seafood brands in France Mahe, Seychelles 1# canned tuna brand in Thailand CORPORATE OFFICE / SALES INDIAN OCEAN TU PRODUCTION PLANT INNOVATION CENTER / R&D CENTER JOINT VENTURE CONTENTS Company Profile 3 Message from Chairman 8 Message from President & CEO 10 Thai Union Strategies 12 Thai Union Strengths 18 Our Brands 20 Financial Highlights 24 5-Year Comparative Financial Statistics 25 Corporate History and Development 26 Vision and Mission 29 Organizational Chart 30 Board of Directors 31 Audit Committee and Sub-Committees 39 Global Leadership Team 40 Management Team 42 Awards and Recognition 44 Food Safety and Quality Standards 46 Our Core Product Categories 48 2015 Sales Breakdown and Distribution 50 Sales Structure of TU and Subsidiaries 51 Group Business Structure 52 Investment in Subsidiaries, Associated and Joint Venture Companies 54 Industry Overveiw 71 Sustainable Development 76 Report of Audit Committee 81 Report of the Nomination and Remuneration Committee 83 Report on the Practice of Good Corporate Governance 84 Report of Risk Management Committee 114 Risk Management and Risk Factors 116 Management Discussion and Analysis 121 Shareholding Structure and Management 134 Connected Transactions 136 Reference 142 Statement of the Board of Director’s Responsibilities for the Financial Statements 146 Independent Auditor’s Report 148 Financial Statements 149 ANNUAL REPORT 2015 THAI UNION GROUP PUBLIC COMPANY LIMITED 008 MESSAGE FROM CHAIRMAN The company has achieved steady and continuous growth in the past year and was able to yield good dividends to our shareholders. This is yet another record-breaking year as the company net profit increased 19.4 percent or THB 6.1 billion (before non-operational one-time expense). Even when we have deducted the one-time expenses, the net profit still stand at 4.1 percent or THB 5.3 billion. This results in an earnings per share of THB 1.10 – 1.1 percent increase over 2014. The gross profit margin was at 16 percent – or 15.7 percent rise over the previous year. The Earnings between Interest, Taxes, Depreciation and Amortization (EBITDA) also increased to THB 11.5 billion – 4.8 percent rise over the previous year. The annual sales revenue also hit a record high with THB 125.3 billion – 3.1 percent increase over the previous year which reached THB 121.4 billion. This encouraging performance results in a lower net debt-to-equity ratio from 0.85x in 2014 down to 0.75x. This is in line with the management policy to maintain the net debt-to-equity ratio under 1.0x and reflects our improving financial situation. The company has grown remarkably this year and if we break down the sale revenues according to the three core business segments, we find that ambient seafood claimed 47 percent of the total. Chilled, frozen and related seafood account for 40 percent and pet food, value-added and other products for the remaining 13 percent. Complementing our company’s strong performance is a multitude of achievements such as: 1. Being included into the Dow Jones Sustainability Index (DJSI) for Emerging Markets for the second consecutive year and with an impressive 67 percent increase in scores. 2. The company was included on the list of 2015 Thailand Sustainability Investment by the Stock Exchange of Thailand 3. Multiple awards from Asiamoney Magazine: Best Overall Corporate Governance in Thailand, Best Responsibilities of Management and the Board of Directors in Thailand, Best Corporate Social Responsibility in Thailand, 2nd Best Shareholders’ Rights and Equitable Treatment in Thailand, 2nd Best Investor Relations in Thailand and 3rd Best Disclosure and Transparency in Thailand. Moreover, the company has signed the Collective Action Coalition Against Corruption on August 20, 2015 – a joint MOU among government and private organizations to fight corruption. This is in perfect alignment of the company’s vision to be the world’s most trusted seafood leader and our long standing policy for ethical operations and good corporate governance. I, as the Chairman, wish to thank the management and all the employees for their hard work and contribution to another year of great success. I also wish to thank our valued shareholders, investors and financial institutions for their continued trust and support. The company is fully prepared to stay sustainably competitive and thrive in the global arena. Mr. Kraisorn Chansiri Chairman Although our company has succeeded in business, the global seafood industry confronted numerous challenges relating to Illegal Unregulated and Unreported Fishing (IUU fishing) and human right violations. We remain committed to addressing these issues. To support this, we recently launched our sustainability strategy “Sea Change” which is designed to deliver real and lasting change in the way we operate and in the broader Thai and global fishing industries. Sea Change identifies four crucial areas for improvement: responsible sourcing; marine conservation; safe and legal labor and caring for communities. Under the current fierce global competition, differentiation is a key growth driver and this is best implemented by promoting innovation to create new value-added products. Therefore we focus on creating the most innovative food products to improve the health and to enhance the well-being of our customers and consumers worldwide. ANNUAL REPORT 2015 THAI UNION GROUP PUBLIC COMPANY LIMITED 010 MESSAGE FROM PRESIDENT AND CEO 2015 was another successful year for Thai Union, as we delivered excellent performance and achieved new Thai Union sales and net profit records. This achievement reflects well on the management efficiency and competency under extensive challenges the Thai seafood industry is facing, including the volatile currency exchanges, the fluctuating tuna and shrimp prices, and the unpredictability of the world economy. The outstanding performance is due to contributions from the strong performance of our leading brands in Europe, acquisition of MerAlliance, the leading chilled smoked salmon producer in Europe, King Oscar, the super-premium sardine brand and Orion Seafood, the leading lobster supplier in the US. Likewise, the recovering shrimp processing business in Thailand and the successful reorganization of the pet care unit in the US also contributed positively. Our company continues to drive growth through our key strategies: 1) organic growth by means of adding value to products 2) food innovations, alongside 3) mergers and acquisitions. In 2015, we engaged in three new businesses: Orion International, a major lobster supplier in the US; a joint venture with Savola Foods Company, the largest consumer goods producer in the Middle East region and most recently, an investment in Rügen Fisch, Germany’s leading shelf-stable seafood company. Focusing on emerging markets is one of our core strategies as we march towards our ambition of USD 8 billion by 2020. After a careful assessment, we have identified the markets of the Middle East, Southeast Asia, and China to be our core focus of emerging markets. Over the next few years, we plan to bring full breadth of Thai Union’s branded products into these emerging markets.