ALWAYS WITH YOU Annual Report 2018 CONTENTS 4 Investor Information 6 Financial Highlights 10 Message from the Chairman 12 CEO Talk 14 Board of Directors 16 Executive Committee & Management Committee 18 Profile of Directors & Key Management 40 Organization Structure 42 Product Portfolio 66 2018 Awards 68 Shareholding Structure 70 Report of the Board of Directors 90 Operational and Financial Review 130 Our People…Our Success 134 Credit Ratings 135 Corporate Governance Report 158 Audit Committee Report 159 Independent Auditor’s Report 162 Financial Statements 277 Interested Persons Transactions Report 294 Announcements to SGX in 2018 295 General Corporate Information 4 Investor Information Thai Beverage Pubilc Company Limited is listed on the Singapore Exchange (SGX-ST) mainboard SGX TICKER / Y92 REUTERS / TBEV.SI BLOOMBERG / THBEV:SP INVESTOR GOOGLE FINANCE / Y92 IPO Date 30 May 2006 IPO Offer Price INFORMATION S$ 0.28 Fiscal Year Ended 30 September External Auditor KPMG Phoomchai Audit Ltd. Dividend Policy Not less than 50% of net profit after deducting all appropriated reserves and investments, subject to cash flow Share Price* High S$ 0.980 Low S$ 0.610 *Data from 2 October 2017 - 28 September 2018 Investor Relations Contact: Investor Relations Department Thai Beverage Pubilc Company Limited 14 Vibhavadi Rangsit Rd., Chomphon Chatuchak, Bangkok 10900, THAILAND IR Website: www.thaibev.com/ir.html E-mail: [email protected] THAIBEV’S THAIBEV’S SHARE PRICE PERFORMANCE MONTHLY TRADING VOLUME Share Price Vol. (S$) (M Shares) 1.10 800 700 1.00 600 0.90 500 0.80 400 300 0.70 200 0.60 100 0.50 0 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 Oct 17 Nov 17 Dec17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 THAIBEV Close STI Rebased SET Rebased 5 Annual Report 2018 Thai Beverage Public Company Limited THAIBEV’S THAIBEV’S SHARE PRICE PERFORMANCE MONTHLY TRADING VOLUME Share Price Vol. (S$) (M Shares) 1.10 800 700 1.00 600 0.90 500 0.80 400 300 0.70 200 0.60 100 0.50 0 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 Oct 17 Nov 17 Dec17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 THAIBEV Close STI Rebased SET Rebased 6 Financial Highlights FINANCIAL HIGHLIGHTS Oct - Sep Oct - Sep Statements of Income ( Mil.Baht ) 2018* 2017* Revenue from sales 229,695 189,997 Total revenues 236,829 203,267 Cost of sales 162,477 131,899 Gross profit 67,218 58,098 Operating profit 25,624 27,524 EBIT 30,406 40,794 Net profit 20,726 34,681 Depreciation and amortisation 5,760 4,308 EBITDA 36,166 45,102 30 Sep 30 Sep Balance Sheets ( Mil.Baht ) 2018 2017 Current assets 75,096 55,921 Non-current assets 326,313 138,319 Total assets 401,409 194,240 Current liabilities 37,459 47,671 Non-current liabilities 223,379 14,056 Total liabilities 260,838 61,727 Shareholders’ equity 140,571 132,513 Total liabilities and shareholders’ equity 401,409 194,240 Oct - Sep Oct - Sep Liquidity Ratio 2018* 2017* Current Ratio times 2.00 1.17 Quick Ratio times 0.88 0.38 Average Collection Period days 5.50 5.01 Average Inventory Period days 89.80 105.03 Average Payable Period days 14.27 12.91 Cash Cycle days 81.03 97.13 7 Annual Report 2018 Thai Beverage Public Company Limited Oct - Sep Oct - Sep Profitability Ratio 2018* 2017* Gross Profit Margin % 29.26 30.58 EBITDA Margin % 15.75 23.74 EBIT Margin % 13.24 21.47 Operating Cash Flows to Operating Profit Ratio % 86.95 107.44 Net Profit Margin % 9.02 18.25 Return on Equity % 15.18 27.07 Oct - Sep Oct - Sep Efficiency Ratios 2018* 2017* Return on Assets % 6.96 18.16 Return on Fixed Assets % 39.26 71.95 Total Assets Turnover times 0.77 1.00 Oct - Sep Oct - Sep Leverage Ratios 2018* 2017* Liability to Equity Ratio times 1.86 0.47 Interest Bearing Debt to Equity Ratio times 1.65 0.31 Net Interest Bearing Debt to EBITDA Ratio** times 5.39 0.68 Interest Coverage Ratio** times 7.63 45.96 * Twelve-month period from October 2017 to September 2018 and from October 2016 to September 2017. ** EBITDA for 12 months from October 2017 to September 2018 included EBITDA of business acquisition of Baht 2,530 million 8 Financial Highlights TOTAL SALES REVENUE 230 Billion Baht Oct 2017 - Sep 2018 Oct 2017 - Sep 2018 (for the year ended 30 September 2018) Oct 2016 - Sep 2017 2018 TOTAL SALES (for the year ended 30 September 2017) 1Billion90 Baht REVENUE BREAKDOWN Oct 2016 - Sep 2017 Million Liters 46% 6% SPIRITS FOOD 2,500 7% 2,034 NON-ALCOHOLIC BEVERAGE 2,000 1,647 41% BEER 1,500 1,000 661 500 0 SPIRITS BEER NON-ALCOHOLIC BEVERAGE 9 Annual Report 2018 Thai Beverage Public Company Limited SALES 230 VOLUME (Million Liters) Billion Baht Oct 2017 - Sep 2018 Oct 2017 - Sep 2018 (for the year ended 30 September 2018) Oct 2016 - Sep 2017 2018 TOTAL SALES (for the year ended 30 September 2017) 1Billion90 Baht REVENUE BREAKDOWN Oct 2016 - Sep 2017 Million Liters 46% 6% SPIRITS FOOD 2,500 7% 2,034 NON-ALCOHOLIC BEVERAGE 845 2,000 1,647 1,644 41% BEER 1,500 1,000 661 633 500 0 SPIRITS BEER NON-ALCOHOLIC BEVERAGE 10 Message from the Chairman MESSAGE FROM THE CHAIRMAN 11 Annual Report 2018 Thai Beverage Public Company Limited Dear Shareholders, 2018 held great significance for Thai Beverage Public we doubled the scale of our food business by acquiring Company Limited (“ThaiBev”) in our journey towards the rights to more than 250 branches of the KFC franchise achieving our “Vision 2020” goal of becoming a stable in Thailand. Operating KFC restaurants will allow us to and sustainable ASEAN beverage leader. The acquisitions gain relevant experience in managing and operating of Saigon Beer - Alcohol - Beverage Corporation (“Sabeco”) large-scale food businesses, which will prepare us well and Grand Royal Group were important steps towards for potential expansions of our food business in future. building our alcoholic beverage business in Vietnam and Myanmar. With a combined population of over 150 million, In FY2018, the Group generated sales revenue these markets have seen high growth rates in income amounting to Baht 229,695 million, net profit of and consumption playing major roles in the growth of Baht 20,726 million, and profit attributable to owners Southeast Asia. Together with Sabeco and Grand Royal of the Company amounting to Baht 18,530 million. Group, we will strive to achieve healthy revenue and ThaiBev’s Board of Directors proposed a dividend of profit growth moving forward, through the sharing of Baht 0.39 per share for the year 2018, translating our knowledge and expertise in the beer and spirits to a payout ratio of 53% of the profit attributable businesses, and the promotion of synergy to create to owners of the Company totalling to Baht 9,793 million. more business opportunities for the group. In addition, we pursued organic growth by establishing Emerald The tireless efforts of ThaiBev’s Board of Directors, Brewery Myanmar Ltd. in Myanmar through investments executives, and employees have driven the expansion of of Fraser and Neave, Limited (“F&N”), and expanding the Group’s business and steered our journey in becoming the presence of “Oishi” green tea in ASEAN. a stable regional beverage company characterized by transparency, good governance and social responsibility. Aside from the expansion of our regional footprint, I would like to thank them for their steadfast commitment ThaiBev also continues to place great emphasis on and diligence as we continue to work towards truly strengthening our businesses in Thailand. Despite the sustainable business growth. challenging situation in the domestic beverage market due to the slowdown in consumption this year, we still On behalf of the Board of Directors and executives, maintained our leading positions in the various beverage I would also like to express our gratitude to shareholders, sectors, and even increased our market share in some customers and business partners. We are encouraged segments. Our alcoholic and non-alcoholic beverage by your trust and confidence in ThaiBev’s potential businesses have been collaborating to utilize their joint throughout the years, and we look forward to your strengths in production and distribution and enhance continued support in the years to come. our competitiveness in the industry. Meanwhile, Charoen Sirivadhanabhakdi Chairman of the Board of Directors 12 CEO Talk CEO TALK 13 Annual Report 2018 Thai Beverage Public Company Limited Dear Shareholders, In 2018, we remained resolute to accomplish Vision 2020 and The sales revenue of our non-alcoholic beverage business strengthen our position as the leader in ASEAN’s beverage in 2018 decreased 3.5% to Baht 16,184 million. Even with the industry. While this year proved to be a challenging year for growth in sales volume for drinking water and carbonated soft the domestic market due to a number of factors including weak drinks, the green tea market was weak, significantly impacted purchasing power and high level of debt in the low-income by excise taxes imposed on green tea with effect from households as well as lackluster demand caused by an increase September 2017. This pushed players in the green tea business in domestic beverage prices following the higher excise tax to increase their prices.