ANNUAL REPORT 2018 OISHI’s CYCLE Contents 8 Message from the Chairman 10 Message from the President and CEO 13 General Information 14 Financial Highlights 16 Board of Directors and the Executives 22 Business Policy and Overview 36 Business Nature 45 Risk Factors 50 Business Assets 57 Legal Disputes 57 Capital Structure 61 Management Structure 74 Information on the Board of Directors and the Executives 96 Remuneration of the Board of Directors and Executives 99 Share ownership of the Board of Directors and the Executives 100 Human Capital and Human Resources Development Policy 103 Internal Control 104 Internal Information Usage 105 Related Parties Transactions 118 Financial Status and the Company’s Performance 128 Report of the Board of Directors’ Responsibility for the Finance Reporting 129 Report of the Audit Committee 131 Report of the Sustainability and Risk Management Committee 132 Report of the Nomination Committee 133 Report of the Remuneration Committee 134 Report of the Good Corporate Governance Committee 135 Corporate Governance Report 153 Financial Statements 225 Corporate Social Responsibility and Sustainability Report 274 GRI Standards Contents 8 Message from the Chairman 10 Message from the President and CEO 13 General Information 14 Financial Highlights 16 Board of Directors and the Executives 22 Business Policy and Overview 36 Business Nature 45 Risk Factors 50 Business Assets 57 Legal Disputes 57 Capital Structure 61 Management Structure 74 Information on the Board of Directors and the Executives 96 Remuneration of the Board of Directors and Executives 99 Share ownership of the Board of Directors and the Executives 100 Human Capital and Human Resources Development Policy 103 Internal Control 104 Internal Information Usage 105 Related Parties Transactions 118 Financial Status and the Company’s Performance 128 Report of the Board of Directors’ Responsibility for the Finance Reporting 129 Report of the Audit Committee 131 Report of the Sustainability and Risk Management Committee 132 Report of the Nomination Committee 133 Report of the Remuneration Committee 134 Report of the Good Corporate Governance Committee 135 Corporate Governance Report 153 Financial Statements 225 Corporate Social Responsibility and Sustainability Report 274 GRI Standards OISHI’s cycle of happiness begins with delicacies crafted from creative RELENTLESS IMPROVEMENT, Japanese cuisine and beverages—the fruits of our constant scrutiny to RELENTLESS CREATIVITY satisfy consumers’desire for continuous improvement. Though top-rated in the market, not only are we competing against ourselves, but we’re also striving to break records. For we yearn to become a wider brand of choice, reach out to new target groups, and contribute to a sustainable society of quality. OISHI’s cycle of happiness begins with delicacies crafted from creative RELENTLESS IMPROVEMENT, Japanese cuisine and beverages—the fruits of our constant scrutiny to RELENTLESS CREATIVITY satisfy consumers’desire for continuous improvement. Though top-rated in the market, not only are we competing against ourselves, but we’re also striving to break records. For we yearn to become a wider brand of choice, reach out to new target groups, and contribute to a sustainable society of quality. 2014 The Most Powerful Thailand’s Most Admired Adman Award & Brand of Thailand 2014 Brand 2014 Symposium 2014 2015 2016 Superbrands Thailand Thailand’s Most Admired Thai Pack Awards 2015 Thailand Kaizen Thailand’s Most Admired The Most Powerful Brand Awards 2015 Brand 2015 Award 2016 Brand 2016 of Thailand 2016 2017 2017 Thai Pack Awards 2017 FDA Quality Award 2017 Superbrands Thailand’s Most Admired ISO 9001:2015 GMP ( Good HACCP ( Hazard Analysis Thailand Awards 2017 Brand 2017 Manufacturing Practice ) Critical Control Point ) 2018 Zero Accident Award The Most Powerful FDA Quality Award Thailand’s Most Thailand Top Company Thailand’s Most Admired 2018 Brand of Thailand 2018 2018 Social Power Brand 2018 Awards 2018 Brand 2018 THE MORE BEST EFFORTS DELIVERED, THE GREATER THEIR VALUES Whether tea leaves, rice seeds, vegetables, fish, or other items under the OISHI brand, our ultimate attention to quality is readily seen on the hands of farmers, keepers, store officers, transporters, cooks, to waiters and waitresses. This has led to numerous, diverse public accolades for branding, production, marketing, creativity, safety, environment, and socio-economic values—eventually culminating in “paybacks” to our staunch consumers. 2014 The Most Powerful Thailand’s Most Admired Adman Award & Brand of Thailand 2014 Brand 2014 Symposium 2014 2015 2016 Superbrands Thailand Thailand’s Most Admired Thai Pack Awards 2015 Thailand Kaizen Thailand’s Most Admired The Most Powerful Brand Awards 2015 Brand 2015 Award 2016 Brand 2016 of Thailand 2016 2017 2017 Thai Pack Awards 2017 FDA Quality Award 2017 Superbrands Thailand’s Most Admired ISO 9001:2015 GMP ( Good HACCP ( Hazard Analysis Thailand Awards 2017 Brand 2017 Manufacturing Practice ) Critical Control Point ) 2018 Zero Accident Award The Most Powerful FDA Quality Award Thailand’s Most Thailand Top Company Thailand’s Most Admired 2018 Brand of Thailand 2018 2018 Social Power Brand 2018 Awards 2018 Brand 2018 THE MORE BEST EFFORTS DELIVERED, THE GREATER THEIR VALUES Whether tea leaves, rice seeds, vegetables, fish, or other items under the OISHI brand, our ultimate attention to quality is readily seen on the hands of farmers, keepers, store officers, transporters, cooks, to waiters and waitresses. This has led to numerous, diverse public accolades for branding, production, marketing, creativity, safety, environment, and socio-economic values—eventually culminating in “paybacks” to our staunch consumers. 8 MESSAGE FROM THE CHAIRMAN In 2018, the Company continued to commit on operating The execution of the above strategies has improved the OISHI GROUP PUBLIC COMPANY LIMITED business for sustainable growths despite many challenges Company’s adaptability and readiness to withstand fast during the year including stagnant economic conditions which changing economic and business environments while enabling reflected by relatively slowdown consumers’ spending and the company to continue operating business as planned with purchasing power, high household debt level and lastly, the first synergized value creations within the Group resulting in ever declaration of excise tax imposition on RTD tea products satisfactory operating performances. In 2018, the Company’s which directly impact growth of domestic RTD tea industry. normalized net profit was1 ,059 million Baht, decreased from Nevertheless, with strong dedications and commitments in the previous year which had normalized net profit of1 ,443 operating and managing the business by our management million Baht. Regarding sales, the Company’s total sales was team and employees as well as the execution of our strategic 12,596 million Baht with normalized net profit margin of 8.4% roadmap “Vision 2020”, a strategic plan of the Group which has of total sales revenue, decreasing from 10.6% of total sales in been continuously implemented since 2014 by the Company in previous year. This is mainly due to the declaration of excise order to become a strong and sustainable leading F&B company tax law and the decrease in RTD tea market size. However, in ASEAN region with 5 core strategies per follow; with continuously strong financial position and well-known brand which reflects into leading market position and robust 1. Growth which is driving sustainable growth in revenue and financial capability to serve future business expansions, the profitability in food and beverage business Company was able to receive affirmed rating at A+ based on 2. Diversity which involves creating varieties of product considerations by TRIS Rating in October 2018. portfolios, segments and price points while leveraging from professional team with diverse experiences, knowledge and The Company continues to build brands in order to strengthen expertise within the Group market leading position by executing innovative marketing 3. Brands which engages in building strong top of mind campaigns and creating brand awareness through several brands by maintaining leading market position in Japanese channels including on-line and social media channels which can food, green tea and RTD tea in Thailand through innovative effectively engage targeted customers group especially young products, creative marketing campaigns, customers generations as proven by “Thailand Most Social Powerful Brand engagement and strong brand awareness creations Award 2018” received from BrandAge magazine for RTD tea 4. Reach which focuses in expanding and initiating distribution category. The measurements were conducted across 4 social coverage to access new consumers in various segments media platforms including Facebook, Instagram, Twitter and both domestic and international Youtube. The Company also continues to develop new product 5. Professionalism which comprises developing and maintaining innovations including “Oishi Green Tea Yuzu Orange Flavor” professional team as well as providing working infrastructure with coconut jelly, which received very good feedbacks from to realize full potentials of the professionals young generation consumers. Success from continuous focuses on brands building and researches & developments of new 9 ANNUAL REPORT 2018 products has resulted in highest market share of the Company Organization as a beverage producer who helps reduce in RTD tea market and Pure RTD green