Ichitan Group Public Company Limited Floor. Charn Issara

2922/301-303 28th Floor. Charn Issara II Bldg., New Petchburi Rd., Bangkapi, Huaykwang, Bangkok 10310Ichitan Group Public Company Limited

ICHITAN GROUP Public Company Limited

Message from Chairman

Financial Highlights

General Information

Board of Directors

Executive Committee

Profiles of Directors and Executive Committee Members

Profiles of Company Secretary and Internal Audit Head

2014 Highlights

Social and Environmental Responsibility

Business Policy and Overview

Nature of Business

Risk Factors

Operating Assets

Legal disputes

Information of Securities and Shareholders

Management Structure

Corporate Governance

Corporate Social Responsibility

Internal Control and Risk Management

Related-Party Tracsaction

Management Discussion and Analysis

Report of the Audit Committee

Report of the Nomination and Remuneration Committee

Report of the Board of Directors’ Responsibility for the Financial Reporting

Financial Statement

Contents020406081011212224263142456263668293

109112127135136137138

Message from Chairman

Dear shareholders,

It is probably not right to say that Ichitan’s growth in the year 2014 is an unprecedented growth.

In 2014, we earned Baht 6,179 million in revenue at the production capacity of 1 billion bottles of drinks which will be increased to 1.2 billion bottles in 2015. Completing the construction of our factory which is recognized as one of the factories with the most advanced technology in Thailand.

Stepping up as No.1 leader in the ready-to-drink tea market. Listing on the Stock Exchange of Thailand.Adding Bireley’s drink to our production line of green tea and herbal tea drinks.Partnering with our regional and global alliances to build “Ichitan Indonesia”

…All of these were materialized within just 1 year. So… It is not right to say that Ichitan’s growth 2014 was unprecedented. Because Ichitan has witnessed big leaps of growth every year,And this is the fourth successive years of impressive success.

Because Ichitan has witnessed big leaps of growth every year, And this is the fourth successive years of impressive success.

Tan PassakornnateeChairman and CEO

Challenging and seemingly impossible goals were achieved and new records were set again and again. Thanks to the devotion and commitment of all employees of Ichitan. With less than 400 staff members, our united effort has proven to be more than enough to conjure a miracle.

Next year will see more challenges…from the new market frontier.Our opportunities will extend from over 60 million people in Thailand,To 600 million people from all AEC countires.I really do hope that the devotion and effort of our management team and the employees, Together with the confidence of all our shareholders in Ichitan, Will be the wind beneath our business wings and make miracles happen for Ichitan again.

On behalf of the Board of Directors, I would like to thank all our shareholders, customers, executives, employees, partners, financial institutions, the press, and related public and private agencies for their continued support for the Company. Please be assured that we will solidly grow our business and take our company to another level of sustainable success and growth in the beverage market. We hold firmly to the principles of corporate governance, transparency, and responsibilities towards the society and the environment and concurrently create the best value for our shareholders.

ANNUAL REPORT 2014

4

Unit 2012 2013 2014

STATEMENTS OF COMPREHENSIVE INCOME

Total Revenues (Million Baht) 4,483 6,532 6,209

Total Expenses (Million Baht) 3,653 5,648 5,189

Profit Before Income Tax Expenses (Million Baht) 830 884 1,020

Profit for the Years (Million Baht) 306 884 1,079

STATEMENTS OF FINANCIAL POSITION

Total Assets (Million Baht) 5,205 6,541 9,008

Total Liabilities (Million Baht) 4,224 4,573 2,813

Shareholders’ Equity (Million Baht) 1,074 1,968 6,195

STATEMENTS OF CASH FLOWS

Cash Flows From Operating Activities (Million Baht) 220 951 1,473

Cash Flows From Investing Activities (Million Baht) -1,536 -1,492 -2,475

Cash Flows From Financing Activities (Million Baht) 1,213 589 1,070

Increase in Cash and Cash Equivalents - Net (Million Baht) -103 48 68

FINANCIAL RATIO

Earnings per Share : EPS 1.0 0.88 0.89

Operating Profit Margin (%) 9.6 15.4 18.0

Gross Profit Margin (%) 26.6 31.8 34.2

Net Profit Margin (%) 7.7 13.5 17.4

Current Ratio (X) 0.7 1.2 1.9

Return on Equity : ROE (%) 50.7 66.7 26.4

Return on Assets : ROA (%) 8.2 15 14

Debt to Equity ratio : D/E (X) 3.9 2.3 0.5

Account Receivable Turnover : A/R Turnover (Times) 11.4 10.2 7.2

Average Collection Period (Days) 31.7 35.2 50.1

Inventory Turnover (Times) 15.80 17.0 13.0

Average Inventory Period (Days) 22.8 21.20 27.0

Accounts Payable Turnover (Times) 9.9 12.5 10.1

Average Payment Period (Days) 36.3 28.9 35.8

Cash Cycle (Days) 18.20 27.6 41.3

Financial Highlights

5

ANNUAL REPORT 2014

Sale Revenue (Million Baht)

Gross Profit Margin

Net Profit (Million Baht)

Net Profit Margin

Return on Equity (ROE)

3,907

27%

51%

306

8%

6,484

32%

67%

884

14%

6,179

34%

26%

1,079

17%

2012

2012

2012

2012

20122013

2013

2013

2013

20132014

2014

2014

2014

2014

7,000

6,000

5,000

4,000

3,000

2,000

1,000

-

40%

35%

30%

25%

20%

15%

10%

5%

-

80%

70%

60%

50%

40%

30%

20%

10%

-

1,200

1,000

800

600

400

200

-

25%

20%

15%

10%

5%

-

6

General Information

Company Name : Ichitan Group Public Company Limited (“ICHI”)

Symbol : ICHI

Registration Number : 0107556000485

Industry : Agro & Food Industry

Sector : Food & Beverage

Type of Business : The Company manufactures and sells ready-to-drink green tea, functional drink, ready-to-drink black tea, herbal drink, and low-sugar tea under the brands of Ichitan Green Tea, Ichitan Double Drink, Ichitan Dragon Black Tea, Yen Yen by Ichitan, and Ichitan Selected, respectively.

Head Office : 2922/301, Charn Issara II Building., 28th Floor, New Pethchburi Road, Bangkapi, Huaykwang, Bangkok, 10310Telephone 0-2716-5555, Fax 0-2716-7000

Ichitan Factory : Ichitan Green Factory, Rojana Industrial Park Zone 3, 111/1 Moo 4

Uthai, Ayutthaya, 13210

Telephone 035-2761111, Fax 035-276123

Registered Capital : Baht 1,300,000,000 (one billion and three hundred million baht)

Paid-up Capital : Baht 1,300,000,000 (one billion and three hundred million baht)

Company Secretary : Telephone 02-716-5555 Ext. 701E-mail : [email protected]

Investor Relations : Telephone 02-716-5555 Ext. 912E-mail : [email protected]

General Information of Co-Venturer

Company Name : PT Ichitan Indonesia Company Limited

Registration No. : 4014112536103886

Type of Business : Manufacturing and distributing ready-to-drink beverage branded Ichitan

Office : Jl. MH. Thamrin No.9, Kel. Cikokol, Kec. Tangerang, Tangerang 15117, Banten

Telephone : 021-55755951

Registered Capital : IDR 400,000 million (approximately Baht 1,184.0 million)

Paid-up Capital : IDR 100,000 million

ANNUAL REPORT 2014

7

References

Registrar : Thailand Securities Depository Company Limited (TSD)62, The Stock Exchange of Thailand Building, 4th, 6th and 7th Floors, Ratchadapisek Road, Klongtoey, Bangkok 10110, Telephone 02-229-2800

Certified Public Accountant : KPMG Phoomchai Audit Limited1, Empire Tower, 50th-51th Floors, South Sathorn Road, Yannawa, Sathorn, Bangkok, 10120, Telephone 02-677-2000

8

1. Mr. Tan Passakornnatee Chairman of the Board

2 35 4 6 8 7 9 10

Board of Directors

9

ANNUAL REPORT 2014

1. Mr. Tan Passakornnatee Chairman of the Board 2. Mrs. Eng Passakornnatee Director

3. Mr. Chiu Yueh-Chin Director

4. Mr. Viroj Supasoon Director

5. Mr. Tanapan Khongnuntha Director

6. Ms. Araya Panichayanon Director

7. AVM.Nathawat Nimmolthanakorn Independent Director

8. Mr. Prasan Limpipatanakul Independent Director

9. Mr. Issarachai Decharit Independent Director

10. Mr. Apichat Sukachirawat Company Secretary

10

153 2 4

1. Mr. Tan Passakornnatee Chairman of the Board

2. Mrs. Eng Passakornnatee Director

3. Mr. Preecha Augcharanonda Director



Executive Committee

11

ANNUAL REPORT 2014

Name-Surname Mr. Tan Passakornnatee

Position Chairman of the Board / Chairman of the Executive Committee and CEO

Age (years) 55

Nationality Thai

Education• Honorary Doctorate, Ramkhamhaeng University• Honorary Doctorate, Business Administration,

Suratthani Rajabhat University• Honorary Doctorate, Lampang University

Training • DAP 12/2004, Thai Institute of Directors

Association

Shareholding (%) 13.85 (as of 28 August 2014)

Family Relationship with Executive • Spouse of Mrs. Eng Passakornnatee

Work Experience : Positions in companies listed on the Stock Exchange of Thailand

Present• Chairman of the Board / Chairman of the

Executive Committee and CEO Ichitan Group Pcl.

1999 - 2010 • Director and Managing Director Oishi Group Pcl.

Positions in companies not listed on the Stock Exchange of Thailand

Present• Director Eng and Eng Sriracha Asset Co., Ltd.• Director Tan and Tan Sriracha Asset Co., Ltd.• Director Eng Tan Asset Co., Ltd.• Director Tanboon Co., Ltd.• Director Japanese Prime Restaurants

Management Co., Ltd.• Director DST Asset Co., Ltd.• Director Tan and Tan Asset Co., Ltd.• Director Diew Diew Kub Tan Co., Ltd.• Director Gluay Gluay Co., Ltd.• Director Passakornnatee Co., Ltd.• Director Ichipung Co., Ltd.• Director Tan Eng Asset Co., Ltd.

01

Profiles of Directors and Executive Committee Members

12

02

Name-Surname Mrs. Eng Passakornnatee

Position Director / Member of the Executive Committee / Member of the Risk Management Committee / Member of the Nomination and Remuneration Committee and Senior Executive Vice President

Age (years) 44

Nationality Thai

Education • Bachelor of Business Administration (Finance),

Bangkok University• Master of Business Administration,

Ramkamhaeng University

Training • DAP 12/2004, Thai Institute of Directors Association

• DCP 44/2004, Thai Institute of Directors Association


Family Relationship with Executive • Spouse of Mr. Tan Passakornnatee

Work Experience :

Positions in companies listed on the Stock Exchange of Thailand

Present• Director, Member of the Executive Committee and

Senior Executive Vice President Ichitan Group Pcl.

1999 - 2010• Director and Deputy Managing Director

Oishi Group Pcl.


Present• Director Eng and Eng Sriracha Asset Co., Ltd.• Director Tan and Tan Sriracha Asset Co., Ltd.• Director Eng Tan Asset Co., Ltd.• Director Tanboon Co., Ltd.• Director Japanese Prime Restaurants

Management Co., Ltd.• Director DST Asset Co., Ltd.• Director Tan and Tan Asset Co., Ltd.• Director Diew Diew Kub Tan Co., Ltd.• Director Gluay Gluay Co., Ltd.• Director Passakornnatee Co., Ltd.• Director Ichipung Co., Ltd.• Director Wedding Business Consultant Co., Ltd.• Director Thank You Service Co., Ltd.• Director T.Y Marriage Studio Co., Ltd.• Director Tokiya Co., Ltd.• Director My Memory Studio Co., Ltd.• Director Your Studio Co., Ltd.• Director Modern Wedding Studio Co., Ltd.• Director Victoria Wedding Professional Co., Ltd.• Director The Classic Studio Co., Ltd.• Director White Mary Studio Co., Ltd.• Director Beloved Studio Co., Ltd.• Director Mary Me Wedding Studio Co., Ltd.• Director Mu Tierra Wedding Gown and

Planner Co., Ltd.• Director Kin Kub Tan Co., Ltd.• Director Tan Eng Asset Co., Ltd.

13

ANNUAL REPORT 2014

Name-Surname Mr. Chiu Yueh-Chin

Position Director and Factory Consultant

Age (years) 53

Nationality Taiwanese Education• Bachelor of Mass Communication (Journalism and Print

Media), Shih Hsin University

Training• None


Family Relationship with Executive • None


2011 - Present• Director and Factory Consultant Ichitan Group Pcl.

1999 - 1994• Director and Member of the Executive Committee

Oishi Group Pcl.


Present• Director Wedding Business Consultant Co., Ltd.

• Director Thank-You Service Co., Ltd.

1993 - 1994• Manager, Franchise Sale Sew Wi Zu Sue Lian Tsaw Co., Ltd.

03

14

Name-Surname Mr. Viroj Supasoon

Position Director / Member of the Executive Committee / Member of the Risk Management Committee and Executive Vice President, Factory Department

Age (years) 49

Nationality Thai

Education• Bachelor of Science, Microbiology, Kasetsart University

Training• DAP 106/2013, Thai Institute of Directors Association




Present• Director, Member of the Executive Committee and Executive

Vice President, Factory Department Ichitan Group Pcl.

2011• Executive Vice President, Factory Department

Ichitan Group Pcl.


2004 - 2011• General Manager Oishi Trading Pcl.

1998 - 2004• Factory Manager Foremost Friesland (Thailand) Co., Ltd.

1997 - 1998• Project Manager Dairy Plus Co., Ltd.

1989 - 1997• Production Manager Foremost Friesland (Thailand) Co., Ltd.

1987 - 1989• Production Team Head Dutch Mill Co., Ltd.

04

15

ANNUAL REPORT 2014

Name-Surname Mr. Tanapan Khongnuntha

Position Director/Member of the Executive Committee/Member of the Risk Management Committee and Executive Vice President, Beverage Business

Age (years) 40

Nationality Thai

Education• Bachelor of Science in Agribusiness Management, King

Mongkut’s Institute of Technology Ladkrabang

• Master of Business Administration, Ramkhamhaeng University




Work Experience :Positions in companies listed on the Stock Exchange of Thailand

Present• Director/ Member of the Executive Committee

and Executive Vice President, Beverage Business Ichitan Group Pcl.

2011• Executive Vice President, Beverage Business

Ichitan Group Pcl.

2010• Department Director (Marketing), Beverage Business

Oishi Group Pcl.

2008 - 2010• Assistant Director (Marketing), Beverage Business

Oishi Group Pcl.

2007 - 2008• Marketing Manager, Beverage Business Oishi Group Pcl.

2004 - 2006• Commercial Marketing Manager Oishi Group

Pcl.


2006 - 2007• General Manager, Marketing Department

Klang Plaza Jomsurang Co., Ltd.

05

16

Name-Surname Ms. Araya Panichayanon

Position Director and Deputy Financial Director

Age (years) 39

Nationality Thai

Education• Bachelor of Business Administration (Finance), Thai

Chamber of Commerce University

Training

• DAP 106/2013, Thai Institute of Directors Association




Present• Director and Deputy Financial Director Ichitan Group Pcl.

2011• Deputy Financial Director Ichitan Group Pcl.


Present• Director Lopburi Inn Plaza Co., Ltd.

• Director Diew Diew Kub Tan Co., Ltd.

2011 - 2013• Director I Am Green Tea Co., Ltd.

(formerly Ichitan Trading Co., Ltd.)

1999 - 2011• Manager, Finance Department Wedding Business

Consultant Co., Ltd.

06

17

ANNUAL REPORT 2014

Name-Surname AVM. Nathawat Nimmolthanakorn

Position Independent Director / Chairman of the Audit Committee and Member of the Risk Management Committee

Age (years) 64

Nationality Thai

Education• Bachelor of Education (Secondary Education),

Srinakharinwirot University


• AACP 16/2014, Thai Institute of Directors Association

Shareholding (%) None

Family Relationship with Executive

• None

Work Experience :


Present• Independent Director, Chairman of the Audit Committee and

Member of the Risk Management Committee Ichitan Group Pcl.


2007 - 2012• Manager Royal Thai Air Force Headquarters Savings

Cooperatives Limited

2005 - 2006• Deputy Chief, Staff Officer to Commander-In-Chief, Royal Thai

Air Force Royal Thai Air Force

2002 - 2005• Deputy Director-General Directorate of Welfare

2000 - 2002• Chief of Staff Directorate of Welfare

1994 - 1997• Director, Welfare Store Division Directorate of Welfare

07

18

Name-Surname Mr. Prasan Limpipatanakul

Position Independent Director/ Member of the Audit Committee and Member of the Nomination and Remuneration Committee

Age (years) 58

Nationality Thai

Education• Bachelor of Accounting, Chulalongkorn University

• Master of Business Administration, Kasetsart University


• AACP 16/2014, Thai Institute of Directors Association




Present• Independent Director/ Member of the Audit Committee and

Member of the Nomination and Remuneration Committe Ichitan Group Pcl.

2009 - 2014• Deputy Managing Director Siam Commercial Samaggi

Insurance Pcl.

2009 - 2014• Member of the Executive Committee and Consultant

Wongpaitoon Group Pcl.


2007 - 2009• Executive Consultant Siam Ball Sport Factory Co., Ltd.

2002 - 2006• Member of the Executive Committee and Consultant Siam

Unisole Co., Ltd.

1999 - 2000• Managing Director K. M. Foam Co., Ltd.

08

19

ANNUAL REPORT 2014

Name-Surname Mr. Issarachai Decharit

Position Independent Director / Member of the Audit Committee and Chairman of Nomination and Remuneration Committee

Age (years) 55

Nationality Thai

Education• Bachelor of Laws, Chulalongkorn University

• Thai barrister at law, Thai Bar Association


• AACP 17/2014 Thai Institute of Directors Association


Family Relationship with Executive : • None


Present• Independent Director, Member of the Audit Committee ,

Chairman of Nomination Remuneration Committee Ichitan Group Pcl.

2003 - Present• Director ACAP Advisory Pcl.

1984 - 2003• Senior Executive Vice President Thai Petrochemical Industry Pcl.


2014 - Present• Director Global Service Center Co., Ltd.

2003 - Present

• Director ACAP Consulting Co., Ltd.

• Director ACAP Corporate Services Co., Ltd.

• Director Capital OK Co., Ltd.

• Director Professional Collection Co., Ltd.

2003 - 2014

• Director ACAP Asset Management Co., Ltd.

09

20

Name-Surname Mr. Preecha Augcharanonda

Position Member of the Executive Committee and Executive Vice President, Accounting & Finance

Age (years) 52

Nationality Thai

Education• Bachelor of Accounting, Thammasat University

• Master of Accounting, Thammasat University



Family Relationship with Executive

• None


Present• Member of the Executive Committee and Executive Vice

President, Accounting and Finance Ichitan Group Pcl.

2013 - 2014• Director Ichitan Group Pcl.

2011• Executive Vice President, Accounting and Finance

Ichitan Group Pcl.

2002 - 2011• Department Director, Accounting and Finance

Oishi Group Pcl.


• None

10

21

ANNUAL REPORT 2014

Position Company Secretary / Secretary to the Executive Committee / Secretary to the Risk Management Committee and Secretary to theNomination and Remuneration Committee

Age (years) 49

Nationality Thai

Education• Bachelor of Accounting,

Ramkhamhaeng University

Training• DAP 106/2013, Thai Institute of

Directors Association

• Company Secretary Program, Class 30



Work Experience :Positions in companies listed on the Stock Exchange of Thailand2011 - Present• Vice President, Accounting & Finance

Ichitan Group Pcl.

2002 - 2011• Deputy Director, Accounting

Department Oishi Group Pcl.

Positions in companies not listed on the Stock Exchange of Thailand1998 - 2002• Accounting Manager Wedding

Business Consultant Co., Ltd.

1995 - 1998• Accounting Manager BKK (1985) Pcl.

1994 - 1995• Accountant Thai-Denmark Swine

Breeder Pcl.

Name-Surname Mr. Sumol Hobumphen

Position Internal Audit Manager

Age (years) 37

Nationality Thai

Education• Master of Science in Corporate Governance,

Chulalongkorn University• Bachelor of Accounting, Rajamangala

University of Technology, Phanakhon

Training • Certified public accountant, Federation of

Accounting Professions Under the Royal Patronage of His Majesty the King

• Endorsed Internal Auditing Program (EIAP), Class 9, Chulalongkorn University

• Internal Auditing Program, Federation of Accounting Professions Under the Royal Patronage of His Majesty the King




2013 - Present• Manager, Internal Audit

Ichitan Group Pcl.

2006 - 2009 • Assistant Manager, Internal Audit

Thanulux Pcl.


2011 - 2013 • Manager, Internal Audit

Perfect Engineering Service Pcl.

1999 - 2006• Assistant Manager,

Internal Audit Division Dr. Virach & Associates Office

Profiles of Company Secretary and Internal Audit Head

Name-Surname Mr. Apichat Sukachirawat

22

2014 Highlights

21 April 2014

Ichitan Group Public Company Limited first listed and traded on the Stock Exchange of Thailand in the food and beverage sector of the agro and food industry under the stock ticker symbol of “ICHI”.

14 April 2014

• The Board of Directors approved the Company’s deal worth Baht 240 million to acquire Bireley’s trademark and beverage formula from Sunny Herb International Beverage Company Limited (Sunny) in 16 countries, i.e. Thailand, Cambodia, South Korea, Canada, Myanmar, the Philippines, Malaysia, Singapore, USA, China, India, Hong Kong, Bangladesh, Indonesia, Taiwan and Vietnam.

• Approval was granted for the acquisition of land (76-1-60 rai) in Rojana Industrial Park in Ayutthaya worth Baht 244.9 million from Rojana Industrial Park Public Company Limited.

• Investments in building construction and installation of systems, machine and equipment totaling Baht 1,295.1 million.

• The 3 investment transactions mentioned above totaled Baht 1,780 million.

23

ANNUAL REPORT 2014

26 August 2014

• The Board of Directors approved the Company’s joint venture (JV) in Indonesia with PT Atri Pasifik (“AP”), an Indonesian company, at 50:50 with the initial investment of IDR 200,000 million (around Baht 592 million) each, representing the JV’s total registered capital of IDR 400,000 million (around Baht 1,184 million).

• Approval was granted for the loan commitment for the JV worth IDR 141,250 million (around Baht 418.1 million), out of the total loan commitment of IDR 282,500 million (around Baht 836.2 million) to be granted to the JV by the shareholders in proportion to their equity in the JV. Loan drawdown is subject to the fulfilment of sales target conditions under the agreement and the JV’s construction of production plant in Indonesia.

• Approval was granted for the investments in installation of systems, machine and equipment totaling Baht 750 million for the Phase 2 Capacity Increase Project of the production factory in Rojana Industrial Park in Ayutthaya.

27 August 2014

The Company signed a joint venture establishment agreement to establish a joint venture (JV) which will manufacture and sell ready-to-drink tea branched “Ichitan” in Indonesia. The Company has authorized the JV to use the Company’s trademarks and beverage formula. The joint venture agreement was made with AP to mutually agree on the JV structure, business operation, business management and administration, rights and duties of each shareholders, management of return on investment in the JV and applicable legal procedures.

29 December 2014

Mr. Chanitr Charnchainarong, Executive Vice President, Stock Exchange of Thailand (SET) congratulated executives of Ichitan Group Public Company Limited (ICHI), a ready-to-drink green tea beverage manufacturer and distributor, on the Company’s success as a constituent of the SET-100 index which will be effective from 1 January 2015.

24

Social and Environmental Responsibility

Recognizing the significance of the betterment of society, community and environment, the Company is committed to address social and environmental needs and make meaningful contributions to needy communities to give back to the society.

Following Thailand’s worst flooding in 2011, Mr.Tan Passakornnatee, the Chairman of the Board, was inspired to instill an awareness and respect for the natural environment among the public. Guided by the Greenovation concept, “Tan Land”, an education center worth more than Baht 50 million, has been established over 2,000 square meters of ICHI’s factory compound in Ayutthaya. Tan Land exists to tell the story of Ichitan, its glory and crisis, through hologram, 3D and interactive media to raise awareness for balancing business interests with environmental protection and disseminate knowledge beneficial for creating a world where the business, the society and the environment can prosper in harmony.

In 2013, the Company donated a total of Baht 6 million in cash to hospitals nationwide which are in need of medical equipment and aspirators.

In 2014, the Company gave priority to education which is a necessary foundation for every member of the society. However, a number of children have limited educational opportunities, especially small schools in rural areas of Thailand which did not receive adequate governmental support. Therefore, the Company is committed to building better educational access and foundation for deprived students and schools through the 2014 Ichitan Brings Smiles project which saw our employees’ active participation and contribution to CSR activities for local communities. The project brought benefits to not only underprivileged students in rural or remote areas but also to the Company’s sustainability and its employees’ sense of community.

The Company made donation in cash and in kind to Kok Sa-nga School in Dong Nonkok Village of Pa-inplang Subdistrict, Erawan District, Loei Province to provide the school and its student with learning materials, sports equipment and funds for student scholarships and building construction. The school has 20 teachers/staff members and 144 students of different ages, from kindergarten to grade 9.

Financial donations have been made to several entities such as Thairath Foundation, mobile breast cancer X-ray unit of Ayutthaya Provincial Health Office, Chiangrai ASEAN Flowers Festival, Pradabos Schools in Southern border provinces and charity rallies. The Company also contributed as a beverage sponsor for events and activities of many schools, educational institutes, public and private organizations and road show exhibitions.

25

ANNUAL REPORT 2014

Environmental ProtectionCutting-Edge and Green TechnologyTo pave the way to the greener future, the Company selected the most advanced and eco-friendly production technology for its Ichitan Green Factory which integrates the cutting-edge cold aseptic filling technology with the Greenovation design concept to showcase the equilibrium between business and respect for the nature. We strive to minimize the consumption of natural resources and energy by optimizing the use of recyclable materials and renewable energy to help preserve and restore the nature through our Ichitan Green Factory which is built for environmental friendliness.

26

Business Policy and Overview

The Board of Directors of Ichitan Group Public Company Limited is vested with the authority to approve the Company’s vision, mission, strategies, goals and business plan and budget plan. The Board regularly meets to continuously monitor the Company’s performance and acknowledge key business progress and decisions implemented by the management team. In addition, monitoring mechanism and system have been put in place to facilitate effective supervision, monitoring and assessment of the management team’s execution to ensure accomplishment of short-term and long-term goals of the Company.

Vision, Objective and GoalThe Company is a mission-led business and aspires to be a leader in the quality beverage business and innovation and grow sustainably with the quality society. Mr. Tan Passakornnatee has consistently demonstrated strong commitment towards building a business that can solidly grow and make far-reaching contribution to the society betterment. To this end, the Company has strived to source the best and quality ingredients for our drinks from farms of hill tribes with an aim to create legitimate, self-sustaining jobs for these farmers as well as has invested in the renewable energy system of our production plant for a greener environment.

MissionAs a mission-led business, the Company aims to offer not only quality products to consumers but also meaningful contribution to the betterment of the society and the quality of life in synchronized pace with profitability growth.

For Consumers : Ichitan aims to offer quality drinks which are good for the health of consumers to maximize their satisfaction.

For Shareholders : Ichitan aims to foster innovation in our business undertaking to continuously enhance our operational efficiency, develop and expand our distribution channels, and tap into new business opportunities to optimize our profitability.

For Society : Ichitan aims to be a role model of a socially responsible organization that gives back to the society for the advancement of Thailand.

For Employees : Ichitan aims to actively encourage its employees to continuously develop themselves into professionals as the development will contribute to their better life quality and stronger sense of engagement with the organization.

VisionIchitan Group Public Company Limited aspires to be a leader in the quality beverage business and innovation and grow sustainably with the quality society.

ANNUAL REPORT 2014

27

Business GoalsThe Company aspires to be a leader in the quality beverage business and innovation and grow sustainably with the quality society. In the next 5 years, the Company will focus on the development of product quality and new products to expand our product variety, cater to the consumer demand growth, and enhance our competitiveness in context of the ASEAN Economic Community (AEC). The Company targets to introduce 3-4 new products each year through our in-house research and development projects and new brand acquisition as and when appropriate. As work process and operational efficiency improvement is one of our key priorities, the Company plans to integrate cutting-edge technology with our production platform to save time, enhance efficiency and contribute to the society.

Major Change and MilestoneMajor milestones of the Company are as listed below:

Timeline Milestones

2010

September 2010• Established Mai Tan Co., Ltd. on 3 September 2010 with the registered

capital of Baht 500 million and issued 5,000,000 ordinary shares at the par value of Baht 100 per share.

November 2010

• Entered into an agreement to buy or sell land for a land property in Rojana Industrial Park in Ayutthaya Province with the area size of 75-3-80 for factory construction.

• Applied for an investment promotion certificate and other licenses.

December 2010 • Engaged a third party in the production of Ichitan Double Drink product and launched marketing and promotion campaign for the product.

2011

January 2011• Introduced Ichitan Double Drink, a functional drink, in 420-ML package

to the market.

March 2011• EGM No. 2/2011 of the Company approved the registered capital increase

to Baht 600 million through the right issue by offering 6,000,000 ordinary shares at the par value of Baht 100 per share to existing shareholders.

April 2011• Earned the investment promotion certificate no. 1496(2)/2554 from the

Board of Investment (BOI)

28

Timeline Milestones

2011

May 2011• Introduced Ichitan Green Tea, a ready-to-drink green tea beverage, in

420-ML bottle package to the market.

September 2011• Started the test-run of the production lines which comprise 1 production

line for bottle type and 1 production line for box type.

October 2011

• Hit by the 2011 flood crisis which inflicted the financial damage worth Baht 1,180.6 million on the Company, partially offset by the initial insurance indemnity of Baht 600 million which reduced the net loss from flood recognized in 2011 to Baht 580.6 million. In the following year, the Company was paid the remaining indemnity of Baht 518.8 million from the insurer which was additionally recognized as income in 2012 (net of the loss from building and equipment amortization worth Baht 50.5 million in 2012)

November 2011 • Changed the Company’s name to Ichitan Group Company Limited.

2012

January 2012 • Introduced Ichitan Green Tea in 250-ML box package to the market.

March-April 2012• Started the production line for bottle type in March and the production

line for box type in April.

July 2012• Started a new production line for box type, increasing the production line

for box type to 2.

September 2012

• Started a new production line for bottle type, increasing the production line for bottle type to 2.

• EGM No. 4/2012 of the Company approved the registered capital increase to Baht 1,000 million through the right issue by offering 10,000,000 ordinary shares at the par value of Baht 100 per share to existing shareholders.

• Introduced Ichitan Dragon Black Tea, a ready-to-drink black tea beverage, in 420-ML package to the market.

• Introduced Ichitan Green Tea in 840-ML package to the market.

2013

January 2013 • Divested the food business.

February 2013• Introduced Yen Yen by Ichitan, a cool herbal green tea drink, in 400-ML package

to the market.

March 2013• Started a new production line for bottle type, increasing the production

line for bottle type to 3.

June 2013• Introduced Yen Yen by Ichitan, a cool herbal green tea drink, in 250-ML

box package to the market.

ANNUAL REPORT 2014

29

Timeline Milestones

2013

July 2013

• EGM No. 2/2013 of the Company approved the conversion of the Company into a public limited company, the decrease of the par value from Baht 100 per share to Baht 1 per share, and the registered capital increase to Baht 1,300 million, divided into 1,300 million shares at the par value of Baht 1 per share.

2014

March 2014

• Introduced Ichitan Selected, a low-sugar tea drink, in 450-ML package to the market.

• Introduced Yen Yen by Ichitan, a cool herbal green tea drink, in 240-ML slim can package to the market.

April 2014• Listed and traded on the Stock Exchange of Thailand.

• Started a new production line for bottle type, increasing the production line for bottle type to 4.

May 2014• Acquired the Bireley’s trademark and beverage formula from Sunny

Herb International Beverage Company.

June 2014 • Discontinued Ichitan Double Drink functional beverage.

July 2014• Introduced Yen Yen by Ichitan, a cool herbal green tea drink, in 800-ML package

(also known as Giant Yen Yen) to the market.

August 2014

• Invested in a joint venture in Indonesia.

• Introduced Yen Yen by Ichitan, a cool honey-mixed chrysanthemum drink, in 400-ML package to the market.

September 2014

• Introduced Yen Yen by Ichitan, a cool honey-mixed chrysanthemum drink, in 250-ML box package and 800-ML bottle package (also known as Giant Yen Yen honey-mixed chrysanthemum drink) to the market.

• Introduced a ready-to-drink honey and lemon green tea beverage, in 290-ML package to the market.

• Introduced Ichitan Dragon Black Tea, a ready-to-drink mulberry-flavored black tea beverage, in 290-ML package to the market.

November 2014• Introduced a ready-to-drink lychee-flavored green tea beverage, in

420-ML package to the market.

30

Shareholding StructureIchitan Group Public Company Limited operates beverage business, and manufactures and sells ready-to-drink green tea beverage, ready-to-drink black tea beverage, herbal drink, and low-sugar ready-to-drink tea beverage, under the brands of Ichitan Green Tea, Ichitan Dragon Black Tea, Yen Yen by Ichitan and Ichitan Selected, respectively.

On 27 August 2014, the Company entered into a joint-venture agreement with PT Atri Pasifik (“AP”), an Indonesian company, to establish a new entity named PT Ichitan Indonesia to manufacture and distribute ready-to-drink beverage branded “Ichitan” in Indonesia. The Company and AP will hold equal equity in the joint venture (50% of the total issued and sold shares of the joint venture). The investment is worth IDR 200,000 million (around Baht 575 million) in total and the Company already injected the initial capital of Baht 135.6 million, representing 50% of the JV’s paid-up capital. The JV has established since 25 November 2014 and thus, as of 31 December 2014, PT Ichitan Indonesia is a jointly controlled entity of the Company.

Relationship with Business of Major Shareholder-None-

Ichitan Group Public Company Limited (ICHI)Registered Capital: Baht 1,300 million.

Paid-up Capital: Baht 1,300 million.

PT Ichitan Indonesia Company Limited

Registered Capital: IDR 400,000 million

(Approximately Baht 1,184.0 million)

PT Atri Pasifik

(Co-Venturer)50%

50%

Shareholding Structure

ANNUAL REPORT 2014

31

Nature of Bussiness

HistoryIchitan Group Public Company Limited (hereinafter referred to as “the Company” or “Ichitan”) which was formerly known as “Mai Tan Company Limited” has been established since 3 September 2010 with the registered capital of Baht 500 Million to operate fusion Japanese-styled steak and food restaurant, Japanese-styled fresh chocolate shop business and beverage business. However, the Company divested its restaurant business in January 2013 to solely focus on the beverage business as the Company aspires to be Thailand’s leader of the quality green tea business.

The Company has operated the beverage business since its inception. The first 2 flavors of our functional drinks branded Ichitan Doubledrink were commercially distributed in January 2011 before Ichitan Green tea, ready-to-drink green tea beverage, available in 3 different flavors was introduced to the market in May 2011. The products were then manufactured by our sub-contracted partners. Subsequently, the Company constructed its own production plant with 2 production lines, one for bottle type and another for box type, at Rojana Industrial Park in Ayutthaya, and test-ran the production lines in September 2011. Unfortunately, the factory was severely hit by the great flood in October 2011 and thus could not run until early 2012. In the same year, the Company increased the production capacity of our factory to 4, divided into 2 production lines for bottle type and another two for box type.

In 2013, the Company invested in a new production line for bottle type, expanding its production capacity to 3 lines bottle type and 2 line for box type, to meet the growing consumer demand.

In 2014, the Company added a new production line for bottle type to increase the production capacity to 4 production lines for bottle type. Therefore, the Company currently has the production of 800 million bottles and 200 million boxes per year from its 6 production lines, of which 4 are for bottle types and 2 are for box types. The Company also offers a wide selection of beverages in 19 different flavors which can be divided into 4 categories: (1) Ready-to-drink green tea beverage branded “Ichitan Green Tea” (2) Ready-to-drink black tea beverage branded “Ichitan Dragon Black Tea” (3) Herbal drinks branded “Yen Yen by Ichitan” (4) Low-sugar tea beverage branded “Ichitan Selected”.

Business OverviewIchitan Group Public Company Limited has been incorporated since 3 September 2010. The Company’s registered capital is worth Baht 1,300 million, fully paid up and divided into 1,300 million shares at the par value of Baht 1.00 each. The Company manufactures and sells ready-to-drink green tea beverage, ready-to-drink black tea beverage, herbal drink, and low-sugar ready-to-drink green tea beverage under the brands of Ichitan Green Tea, Ichitan Dragon Black Tea, Yen Yen by Ichitan and Ichitan Selected, respectively.

Regarding the marketing strategy, the Company positions its products as high quality beverage made from carefully selected, premium quality raw materials. We always ensure that our manufacturing, bottling and boxing processes meet the food hygiene standards because the consumers’ health and the preservation of the original taste and flavor are our key concerns. The strengths of our products are as follows:

32

• High quality, healthy drinks made from organic green tea leaves certified by the Department of Agriculture, Ministry of Agriculture and Cooperatives.

• Trendypackagingwithavarietyofservingsizestomaximizetheconsumer’ssatisfactionandcatertothe needs of each target group.

• GoodflavorasrightasThaitaste.

• Brandimageasproductsthatfostersustainablegrowthofthebusinessandthesociety.

As of 31 December 2014, the total production capacity of the Company was as follows:

• Atotalof4bottlinglineswiththeaggregatecapacityof800millionbottlesperyear(orabout336millionliters per year).

• Atotalof2UHTboxinglineswiththeaggregatecapacityof200millionboxesperyear(or50millionliters/year).

Currently, our products can be divided into 4 categories which are available both in bottle and box types:

1. Ichitan Green Tea is quality ready-to-drink green tea and is available in 12 selections: (1) Original (2) Honey Lemon (3) Kikucha (Chrysanthemum) (4) Genmai (5) Sugar-Free (6) Midori Punch (7) Super Berry (8) Apple-Kiwi (9) Corn (10) Japanese Plum (11) Sugar-Free OoLong Tea (12) Lychee.

2. Ready-to-drink black tea, “Ichitan Dragon Black Tea”, is available in 3 flavors: (1) Lemon (2) Strawberry (3) Mulberry.

3. The herbal drink “Yen Yen by Ichitan” offers 2 flavors: (1) YenYen cool herb green tea (2) YenYen honey-mixed chrysanthemum.

4. Low-sugar “Ichitan Selected” offers 2 flavors: (1) Matcha (2) Oolong

The Company distributes all products through 3 distributors, namely (1) DKSH (Thailand) Co., Ltd. (2) Boonrawd Asia Co., Ltd. and (3) I Am Green Tea Co., Ltd. which is our related-party.

To protect our customer base from existing traditional trade channels, focusing on the target group that does not overlap with those of DKSH and Boonrawd Asia, the Company founded I Am Green Tea Co., Ltd. (IGT) in June 2011 which was 75% owned by Mrs. Eng Passakornnatee (Mr. Tan Passakornnatee’s spouse) and 25% owned by the Tri Pruek Family which is related to neither the Company nor its executives. The purpose of establishing IGT is to distribute Ichitan products through the dealers. However, the Company subsequently shifted its focus only to manufacturing, marketing and branding in order to avoid distribution-related works which require substantial dedication and resources. Therefore, the Company agreed to separate IGT from the Company’s business group before proceeding with the SET-listing. In addition, Mrs. Eng Passakornnatee entirely sold her equity in IGT to Ms. Tanita Passakornnatee (Mr. Tan’s elder sister) who owns 99.99% shares in O.G.T. Company Limited. Formerly, OGT had distributed green tea beverage products through the dealer channel for another green tea drink company distribution. At the present, OGT no longer provides such distribution service to the said green tea drink company and do not run any competing or related business with Ichitan. OGT earns land lease fees from IGT under the prior land lease agreement.

ANNUAL REPORT 2014

33

Revenue StructureThe Company’s revenue structure from 2012 - 2014 is as shown below:

Revenue Structure2012 2013 2014

MB % MB % MB %

Net revenue from sales 3,906.8 87.1% 6,484.4 99.3% 6,179.1 99.5%

Net revenue from flood insurance claims 518.8 11.6% - - - -

Other revenue 57.3 1.3% 47.5 0.7% 29.8 0.5%

Total revenue 4,482.9 100.0% 6,531.8 100.0% 6,208.9 100.0%

Sales Growth 269.7% 66.0% (4.7%)

Market Share* 27.1% 42.1% 43.8%

Number of Flavors 16 17 19

Source: Retail Index of Nielsen, January 2015.

The Company’s revenue is primarily from the sales of ready-to-drink tea beverages which stood at Baht 3,906.8 million, Baht 6,484.4 million and Baht 6,179.1 million in 2012, 2013 and 2014, respectively. The said sales figures accounted for 87.1%, 99.3% and 99.5% of the total sales in 2012, 2013 and 2014 respectively and were expected to continuously grow.

In 2012, the Company recorded the sales revenue of Baht 3,906.8 million, accounting for 87.1% of the total revenue, the revenue from flood insurance claims of Baht 518.8 million Baht, which was 11.6% of the total revenue, and other revenue of Baht 57.3 million which represented 1.3% of the total revenue.

In 2013, the Company achieved the sales revenue of Baht 6,484.4 million or 99.3% of the total revenue and other revenue of Baht 47.5 million which represented 0.7% of the total revenue.

In 2014, the Company gained Baht 6,179.1 million from sales or 99.5% of the total revenue and its other revenue totaled Baht 29.8 million or 0.5% of the total revenue.

34

PackageCan

240 mlUHT

250 mlPET

290 mlPET

400 mlPET

420 mlPET

450 mlPET

800 mlPET

840ml

Price THB 12

THB 10

THB 10

THB 15

THB 15-20

THB 20

THB 25

THB 25

Green Tea

1. Original - - - - ✓ - - -

2. Honey Lemon - ✓ ✓ - ✓ - - ✓ 3. Kikucha (Chrysanthemum) - ✓ - - ✓ - - ✓

4. Genmai - ✓ - - ✓ - - ✓

5. Sugar Free - - - - ✓ - - -

6. Midori Punch - ✓ - - ✓ - - -

7. Corn - - - - ✓ - - -

8. Super Berry - ✓ - - - - - -

9. Apple Kiwi - ✓ - - - - - -

10. Japanese Plum - - - - ✓ - - -

11. Oolong Sugar Free - - - - ✓ - - -

12. TLychee - - - - ✓ - - -

Black Tea

13. Lemon - - - - ✓ - - -

14. Strawberry - - - - ✓ - - -

15. Mulberry - - ✓ - ✓ - - -

Herb Tea

16. YenYen Cool Herb Tea ✓ ✓ - ✓ - - ✓ -17. YenYen Chrysanthemum

Honey - ✓ - ✓ - - ✓ -

Low Sugar

18. Matcha Low Sugar - - - - - ✓ - -

19. Oolong Low Sugar - - - - - ✓ - -

Product and PackageTheCompanysellsbeveragesin19flavorsand8servingsizesdetailedbelow:

ANNUAL REPORT 2014

35

BOI CertificateOn 3 September 2013, the Company received the investment promotion certificate number 5175(2)/2556 from the Board of Investment (BOI) (a new certificate issued by the Board of Investment to support the restoration of business affected by the flood crisis based on the Company’s prior BOI certificate number of 1496(2)/2554 issued on 27 April 2011). Under the eligibility criterion number 1.11 Businesses related to food manufacture, food preservation or food additives by using the modern technology applicable to the business related to sealed vegetable and fruit juice beverages, the Company is entitled to the BOI incentive as the beverages produced by the Company use green tea leaves as a main ingredient.

Summary of BOI Privileges

• Permissionforemploymentofalienskilledworkersandexperts.

• Exemptionfromimportdutyonmachinery.

• ExemptionfromcorporateincometaxonthenetprofitofthebusinesseligibleforBOIprivilegewhereasthe aggregate benefits shall not exceed Baht 6,311.5 million or 150% of the investment value excluding the land costs and working capital. The benefit amount will vary by the investment value, exclusive of the actual land costs and working capital as of the commencement date of the entitled business. As of 31 December 2014, the Company recorded the investment of approximately Baht 4,132.9 million in buildings and equipment.

• 8-year exemption fromcorporate income tax on net profit of the entitled business, starting from 16 March 2012 to 15 March 2020.

• Exemption from income taxondividendby theBOI-supportedbusiness throughout thecorporateincome tax exemption period.

Key BOI Terms and Conditions

• Nomortgage, sales, transfer, leaseout or permit other person to usemachinery exempted from the import duty, unless prior permission for the machinery mortgage has been granted.

• ProductsmustmeettheinternationalqualitystandardsandcertifiedbyISO9000orISO14000,oranyother similar certification standards within 2 years from the starting date.

• Atleast51%ofthetotalregisteredcapitalmustbeheldbyThais.

Distribution ChannelsAt the present, the Company sells all products through 4 distribution channels as follows:

1. DKSH (Thailand) Co., Ltd. is the main distributor of the Company. Goods distributed by DKSH accounted for 76.98% of the total sales of the Company in 2014. DKSH mainly distributed products through modern trade and traditional trade channels. The Company has entered into a long-term distribution contract with DKSH and has continuously monitored the movement of modern traders in DKSH’s portfolio to support the Company’s distribution and promotion management.

36

2. I Am Green Tea Co., Ltd. distributed 11.83% of the total sales in 2014, focusing on selling through dealer networks, restaurants, traditional trade shops, cash vans and other channels not covered by other distributors.

3. Boonrawd Asia Co., Ltd. distributed 10.88% of the total sales in 2014, focusing on the distributor network, traditional trade and channel and outlets in Boonrawd’s network.

4. Export to AEC countries such as Laos, Cambodia, Myanmar, etc.

However, the distributors have their exclusive sales territory and networks which do not overlap.

Market and CompetitionCompetitive Strategy

1. Brand Strategy

As there is minimal differentiation in Thailand’s green tea market in terms of products’ appearance and taste. Therefore, the outstanding product design and powerful branding are considered key differentiators and contributors to customer base protection. The Company also aims to position Ichitan as a quality brand and thus consistently convey such brand image to the market through the 360-degree marketing strategy.

2. Product Strategy

To highlight the standpoint of the quality brand, the Company strictly controls quality in every step of our process, from the initial steps of research and development and raw materials selection to the production which employs advanced technology to preserve ingredients’ freshness and deliver quality products to consumers. In addition, our R&D team is comprised of professional experts in the beverage field who truly understand customers’ needs and expectation which enable them to develop new products that match the taste of Thai consumers such the herbal drink “Yen Yen by Ichitan”.

As for packaging, the Company pays attention to the details of package designs that respond to customers’ needs and the needs for food safety and convenience. We have selected labels that present modern design to draw attention and urge purchase decision at the point of sale.

3. Effective Inventory and Cost Management

Inadditiontotheeconomiesofscalefromthespreadoffixedcostssuchasmachineryamortizationand land lease expenses over more units of output, the Company has employed the cold aseptic filling system, an advanced technology, in our production process to further reduce our production cost. The technology offers the benefits of (1) lighter materials used (2) longer, continuous production up to 120 hours before each cleaning session which makes production (3) automation features which offers labor-cost saving advantage. As for the inventory management, the Company has implemented the automated storage & retrievable system which leads to higher efficiency and lower labor costs. These factors altogether contribute to the Company’s enhanced efficiency, the ability to immediately respond to customer’s demand and ultimately our better profitability. The Company has also strived to closely controlandmonitorproductioncostsandresourceutilizationtoachieveoptimizedeffectiveness.

ANNUAL REPORT 2014

37

4. Sales and Distribution Management

In order to make our products available to the customers in a timely manner and avoid the issue of product shortage, the Company has exercised controls throughout the finished goods distribution process, from the production site to distributors and retailers. The Company has also kept track of and analyzedsalesperformanceandinventoryturnovertosupporteffectivestockmanagement.Salesandmarketingstrategyhasbeencarefullycraftedandcustomizedtotheeachzone.TheCompanyhasplanned to penetrate the AEC markets more aggressively.

5. Marketing and Sales Strategy

Consumer Demand Forecast: Our forecasts of consumers’ demands are based on historical and statistical data and seasonal factors such as weather conditions, special and festive occasions, competition environment and the economic situations. The Company has strived to ensure the forecast accuracy and limit the deviation to 10% at a maximum. Realistic forecasts will contribute to the efficiency of production and promotional activities.

Marketing and Sales Promotion Plan: The sales of beverage business are subject to seasonal factors and typically reached a peak in summer. Therefore, to promptly respond to the shift in consumers’ demand, the Company uses the above the line and below the line marketing strategies in summer months and offers trade discounts to distributors in other months when lower consumption is typically seen. Furthermore, the Company has implemented the proactive marketing plan to increase our market shares and concurrently focused on PR communications to portray Ichitan as a quality product brand. Toemphasizeourproductposition,wehave4differenttypesofsalespromotions:salespromotionspecific to retailers, sales promotions specific to distributors, nationwide campaigns, and online sales promotions. Our annual budget allocation to these activities is based on the sales forecast.

Pricing and Trade Discounts: As mentioned above, ready-to-drink beverage business is sensitive to seasonal factors. Thus, it is essential for the Company to regularly review and align its trade discount strategy to the changing market demands. However, the selling price is probably not as flexible due to the intense competition.

Industry ConditionsAs the Company’s primary source of income is the ready-to-drink tea business which accounts for 99% of the total revenue in 2014, our analysis of industry conditions mainly focuses on the ready-to-drink tea section.

In 2012, the ready-to-drink tea market was worth Baht 13,177 million, up 39% from the previous year on the back of the consumers’ purchasing power which surged sharply from 2011 when the flood crisis struck Thailand.

In 2013, the ready-to-drink tea market recorded the total value of Baht 16,143 million, increasing 23% from the previous year and achieving the highest growth if compared to other beverage categories. It was expected that the growth trend would continue its upward movement because in the past 4 years (from 2010 to 2013) the value of the ready-to-drink tea market showed the compound annual growth rate (CAGR) of approximately 26.75%.

38

In 2014, the ready-to-drink tea market was worth value only Baht 15,405 million in total (excluding the herbaldrink,“YenYen”,andthehoney-mixedchrysanthemumdrinkwhicharecategorizedasvegetableand fruit juice drinks and other beverages), shrinking 4.57% from the prior year. This was the first negative growth of the business in 10 years after its consistent, buoyant growth with the CAGR of around 20.39% in the prior 5 years (2010 – 2014).

The top 3 leaders of ready-to-drink tea market in 2014 was Ichitan, Oishi and Puriku with the market share of 43.80%, 37.70% and 7.50% respectively. (Source: Retail Index of Nielsen, January 2015)

Value of Ready-To-Drink Tea Market (MB) Growth Rate

Market Value Growth Rate

20,000

10,000

15,000

5,000

0

50%

22.50%

2009 2010 2011 2012 2013 2014

36.25%

8.75%

-5%

6,317

7,798

9,481

13,177

16,14338.98%

21.58%

23.44%22.51%

-4.57%

15,405

ICHI

OISHI

PURIKU

LIPTON

OTHER

LIPTON 4%OTHER 7%

ICHI 0.438

OISNI 0.377%

PURIKU 0.75%

*Remarks: The above market share does not include the herbal drink, Yen Yen and the honey-mix chrysanthemum drink which belong to the category of vegetable and fruit juice and other beverages.

ANNUAL REPORT 2014

39

The ready-to-drink tea market had seen continuous growth rate until in 2014 when the growth was stemmed by the domestic political conflicts and the economic conditions which were pressured by the prices of agricultural commodities which had fallen and the weakened purchase power of consumers. Besides, the competition had intensified in terms of pricing and promotional campaigns. However, it was expected that the ready-to-drink tea market can further expand on the back of new market entrants.

Healthy drinks have been increasingly introduced to the market, especially low-sugar drinks, no-sugar drinks and drinks with natural sweetener which have been designed for health-conscious consumers. As the consumers’ health has always been one of our focuses, the health awareness trend gives the Company competitive advantages because we already have a research and development team which has dedicated the efforts to the development new products that are good for health and at the same time match the needs of customer, including health-focused consumers. The rise in popularity of healthy drinks will attract more players to the market and the price competition might ensue. However, the ready-to-drink market still has strong potential for growth.

The Company strongly believes that the ready-to-drink market will see continuous growth. To expand our customer base and increase sales performance, we will relentlessly develop and roll out new products and promotional campaigns. Our strategy includes product differentiation and the introduction of unique, trendsetting products to the market to offer new choices to customers as evident in the case of the herbal drink “Yen Yen” by Ichitan, of which sales accounted for more than 18.40% of the total ready-to-drink tea market value in 2014 (excluding Yen Yen chrysanthemum drink). Our position as No. 1 leader with 43.80% market share bespeaks the consumers’ confidence in Ichitan’s products.

In 2014, the Company refined its marketing strategy to capture new markets through the launch of new products such as “Ichitan Selected”, a low-sugar, premium-grade tea drink which targets health-focused consumers. The premium product has been well-received by consumers and boosted the sales of our premium product portfolio. Another new product is “Yen Yen” by Ichitan, a honey-mixed chrysanthemum drink, which offers the pre-eminent taste like no other green tea drinks and has a distinctive quality as a great refreshment that goes well with hot and spicy foods. Apart from advertisements, the Company used other marketing tools such as road shows and sales promotions to urge consumers to try out our new products and widen our customer base.

The Company plans to add more variety to our products by introducing new flavors and products with natural sweetener. With the wider selection, the Company will be able to sharpen its competitive edge and increase our market share. In addition, we will continue to adopt integrated marketing approaches and focus on research and development to concoct great drink formulas that match customers’ needs and expectation to sustain our position as a solid No.1 leader of the ready-to-drink green tea market.

Product SourcingRaw Material Sourching

Besides in-house production capacity, the Company outsources production to external suppliers where our production capacity is lower than the sales forecast. In the past 4 years (2011-2014), the proportion of outsourcing activities continuously dropped from 100% in 2011 to 46%, 25% and 9% in 2012-2014, respectively.

40

In 2014, the Company implemented phase 2 of our production capacity increase project which resulted in the addition of an extra bottling line. It was expected that the outsourcing activities will further decrease to 2% or lower in 2015.

As regards the sourcing of key raw materials such as tea leaves, fructose, cane sugar, water and flavor ingredients, the Company has exercised quality control over every step in the pre-production process, from cultivation to raw material selection and storage, to ensure that all ingredients meet the high-quality standards. Outsourcing manufacturers have been provided with premix substance to protect the secrecy of our drink recipe. In addition, as a quality control measure, all manufacturers are provided with detailed list of ingredients and obligated to use raw materials supplied by vendors on our approved list. In addition, our quality control team will conduct a monthly inspection to ensure that the goods produced meet our quality standards.

Organic Tea Leaves: To mitigate the risk of raw material shortage, the Company has developed an annual production and sourcing plan as well as entered into sale and purchase agreements, usually with the validity period of 1 year, with suppliers who gather tea leave supplies from farmers. Moreover, to control the quality of tea leaves, our research and development team jointly supervises the entire process, from organic farming, tea leave fermentation, harvesting, steaming to pre-delivery storage. The team also check the quality of tea leave supplies in terms of odor, flavor, weight and color, prior to the manufacturing process. Then, tea leaves are stored in the temperature chamber to prevent quality deterioration. Tea leaves supplies are from the Northern region of Thailand where the weather conditions are ideal for tea leave growing and thus the Company has never experienced tea leave supply shortage. The Company has entered into sale and purchase agreement with 2-3 suppliers and tea leaves from these supplies are of equivalent substitutes for each other, given that fact that all products, despite varying flavor additives, use the same kind of fresh tea leaves and difference between green tea and black tea lies in the way tea leaves are processed.

Fructose and Sugar: These materials can be easily procured in Thailand and sugar products from different manufacturers are of comparable quality. Though sugar prices fluctuate at a certain extent with the quantity supply and the global price movement, the domestic sugar prices are controlled by the government, hence slight price volatility.

Water: Water used in our production process is supplied by Rojana Industrial Park. The water has been purified by the reverse osmosis system and treated in accordance with WHO’s 1993 guidelines.

Flavor: Though the flavor additives are only slightly used, it is one of key ingredients as it scents our drinks and creates first impression of customers towards our products. The Company sources flavor additives from various suppliers.

Packaging: The Company sources PET bottles, boxes, lids, cartons and labels from reliable suppliers who successfully meet our selection criteria which also factor in the reliability of the suppliers’ work system. This provides us with the assurance that the suppliers will be able to punctually deliver quality materials as agreed upon. The Company also regularly monitors and checks performance and quality of goods provided by the suppliers.

Natural Gas: The Company has entered into a natural gas sale and purchase agreement with a domestic supplier. The agreement is valid until 31 August 2018 and can be renewed with a 90-day prior written notice.

ANNUAL REPORT 2014

41

In addition, to reduce the risk from overdependence on suppliers and to obtain the reasonable material prices, the Company has the policy to purchase raw materials from various major suppliers. In addition, the Company has forged positive business relationship with raw material suppliers and have never sourced more than 30% of its total raw material needs from a particular supplier.

Production Process

Major steps in our production processes include tea leaves extracting, brewing, bottling, and quality control. Every step is controlled through our advanced systems and chemical-free.

Organic tea leaves will be brought to the temperature-controlled extractor and then cooled down. After precipitation, the tea is strained off and transferred to flavor-mixing station and subsequently the bottling station. The Company uses the cold aseptic filling system which is the most advanced filling technology from Japan to preserve the freshness and quality as well as to ensure the food hygiene of our drinks. Theflavor-addedbeverageswillbesterilizedat137degreeCelsiusfor4secondsandthenimmediatelycooleddownto25degreeCelsius,filledinsterilizedpackageswhichincludePETbottlesandwithplasticlids and boxes.

Every step in the production processes is controlled and recorded by automated systems. The production line will halt immediately upon irregularity and errors will be reported to production control staff who are onshiftinordertoimmediatelyresolvetheerrorsandminimizeundesiredeffectsonproduction.

Quality Assurance and Control

The Company has implemented quality control at every step such as the selection of suppliers, suppliers’ system check, and pre-production quality check. In addition, the “Quality Plan” which is a random quality check tool under the MIL-STD_105E standard has been used in the inspection of production process. Quality check of finished products is also performed to ensure compliance with physical, chemical, biological and sensory standards prior to release from the production site. Besides, the Company encourages continuous quality improvement by adopting the integrated quality management principles to achieve quality, hygiene andfoodsafetystandardssuchasGMP,HACCP,ISO9001:2008,HALALandotherinternationally-recognizedstandards.

Environmental Effect

-None-

42

Risk Factors

• RiskfromlinkagebetweenIchitanbrandandMr.TanPassakornnateeLinkagebetweenIchitanbrandandMr.TanPassakornnateewhoistheCompany’smajorshareholderhasstrategicallycontributedtothebrandrecognitionandawarenessamongconsumers.TheCompanyrecognizespotentialthreatsconsequentialtotheabsenceofsuchlinkageandhasattemptedtomitigatetheriskbystrengthenthebrandidentitywithouttyingitupwithanyindividual.Toreachthegoal,ourmarketingteamisphasingoutthedistinctivepresenceofMr.TanPassakornnateeinnewcommercialsandadvertisements,exceptforcertainnewproductswhichtheCompanyintendstoconveytothegeneralpublic,clientsandconsumersthattheyareMr.Tan’sproducts.

• RiskfromnewproductdevelopmentContinuousnewproductdevelopmentisessentialfortheCompany’sabilitytoeffectivelyrespondtotheevolvingneedsofconsumers.TheCompanyisexposedtotherisksassociatedwithnewproductdevelopmentsuchassubstantialinvestmentintheinnovation,marketingandPRprocesses.Therefore,before the launchofeachproduct, theCompany focusesonconsumerbehavior study,popularityanddemandsurvey,andanalysisofreturnoninvestment.TheCompanyhasitsownR&DlaboratoryworthuptoBaht10milliontosupportournewproductdevelopmentprojectswhichtypicallyarenotcostly.ThebudgetformarketingandpromotionalactivitiesisratherhighyetcontrollableanditistheCompany’spolicytodiscontinuemarketingandpromotionalcampaignsforanewproductoranewproductitselfifitspopularityremainsunsatisfactoryaftermorethanBaht50millionhasbeenspentonitsmarketingandpromotionalactivities.MarketingandPRexpensesofproductshavebeenwithintheallocatedbudgetwhichcanberevisedasandwhenappropriate.

• RiskfromShortageandPriceFluctuationofRawMaterialKeyrawmaterialsaretealeaves,fructose,canesugarandflavoringredientswhichaltogetheraccountfor30%oftheproductioncosts.Astheclimatechangeaffectsagriculturalproductivity,theCompanymightexperiencerawmaterialshortageandtheresultantpricefluctuation.Tomitigatetherisk,theCompanyhasdevelopedarawmaterialsourcingplanandtheProcurementDepartmenthasdevelopedanannualproductionandsourcingplanaswellasenteredintosaleandpurchaseagreements,usuallywiththevalidityperiodofatleast1year,withmajorsupplierstosecureadequaterawmaterialsatreasonableprices.Inaddition,theCompanyhasmadeagreementswithatleast3supplierstoavoidoverdependenceonanyparticularsupplieraswellastopreventtheshortageofrawmaterialintheeventthatasupplierscannotprovidetheCompanywithsufficientrawmaterials.

Withregardtotealeaves,theCompanyhasenteredintotealeaveprocurementagreementwithseveralsuppliersandtealeavesfromthesesuppliesareequivalentsubstitutesforeachother,giventhefactthatallproducts,despitevaryingflavoradditives,usethesamekindoffreshtealeavesanddifferencebetweengreenteaandblacktealiesinthewaytealeavesareprocessed.Withthis,theCompanycaneffectivelyavoidoverdependenceonaparticularsupplier.

• RiskfromFoodSafetyHazardFoodhygieneisamongourtopprioritiesasevenaminormistakecanhavematerialimpactonthecredibilityofallIchitan’sproducts.Wehavecarefullyselectedingredientsandsupervisedeverystep

ANNUAL REPORT 2014

43

oftheproductionprocesstoachievetheconsumerconfidenceinthequalityofourproductswhichmeetinternationalstandardssuchasGMP,HACCP,ISO9001:2008andHALAL.Toassurefoodsafety,batchsamplesaretestedfor7daysinaccordancewithapplicablestandardsbeforethereleaseofeachbatchfordistributiontothemarketandthesamplesareretainedasreference.Ifthetestresultsofthebatchsamplesindicatecontamination,theentirebatchwillbedestroyed.However,ourproductsaremanufacturedinclosed,hi-techsystemsandnofoodcontaminationhasbeenfound.

• RiskfromInterestRateIncreaseAsof31December2014,theCompanyhastheloanobligationsworthBaht1,963millionchargedatthefloatinginterestrateandthusisexposedtotheriskofinterestratehikewhichmighthaveadverseeffectontheCompany’sfinancialperformance.InApril2014,theCompanylaunchedanIPOandsuccessfullyraisedthecapitalworthBaht3,900million.TheIPOproceedswereusedtorepaydirectors’loansandbankloansworthapproximatelyBaht3,000million.ThedecreaseoftheoutstandingloanobligationswithbankstoBaht1,963millionasof31December2014hassignificantlyreducedtheCompany’sriskassociatedwiththeinterestratemovement.

• RiskfromDependenceonMajorDistributorsAtpresent,theCompany’sproductshavebeendistributedthroughthemoderntradechannel(accountingfor 56%of the total salesof theyearended31December2014) and the traditional tradechannel(accountingfor44%ofthetotalsalesoftheyearended31December2014)by3majordistributors,namelyDKSH(Thailand)Co.,Ltd.,IAMGreenTeaCo.,Ltd.,andBoonRawdAsiaCo.,Ltd.underthedistributionagreements,ofwhichvalidityperiodsrangefrom3–5years.Thedistributionvolumesofthedistributorsfortheyearended31December2014were77%(DKSH),12%(IAMGreenTea)and11%(BoonRawd).Basedonthisfact,theCompanyisexposedtotheriskofoverdependenceonthemajordistributors.Theengagementof3distributorsinsteadofonly1distributorintheproductdistributionisameansofriskmitigationandthedistributionagreementmadewithDKSHwhichhasbeentheoriginaldistributorof theCompanyallows theCompany to involve2moredistributors.Given thepositiverelationshipbetweentheCompanyandthedistributorsandtheCompany’sstrictcompliancewiththedistributionagreements,theCompanyisconfidentthatthedistributorswillagreetorenewtheirdistributionagreementswiththeCompany.

• RiskfromIntenseCompetitionAsthebeveragebusinessbenefitsfromtheweatherconditionsofThailandandhascontinuouslyrecordedbuoyantgrowth,manynewplayershaveenteredthemarket.Thishasintensifiedthecompetitionandharmedtheprofitabilityofmanufacturers,especiallythosewithinefficientmanagementsystem.PricingshouldbesuitableandtheCompanydoesnotsupportthepricecutstrategy.Rather,theCompanyaimstowincustomersthroughcreativemarketingandpromotionalcampaigns.Forthegreen-teaproductswhichcanhardlybedifferentiated, theCompanyaims tomakeeffectiveproductionandlogisticsmanagementourkeystrengthforhigherprofit.ProductdevelopmentisanotherkeystrengthofIchitanasevidentin“YenYenbyIchitan”herbaldrinkwhichisunbeatablebyanycompetitorsintermsofitsuniquetasteandbrand.TheCompanytargetstolaunchnewfruitjuiceproductsunder“Bireley’s”trademarkin2015todiversifyourproductportfolioandwidentheopportunityhorizon.

44

• RiskfromLiabilityforExciseTaxonGreenTeaBeverageTheCompanyhasbeenexemptedfromexcisetaxbecausethecontentsoffruitandvegetablejuicemixinourgreenteabeverageproductsmeettherequirementsundertheNotificationoftheExciseDepartmentRe:Taxexemptioncriteriaandconditionsforfruitandvegetablejuicebeverages.However,theExciseDepartmentisreviewingtheexcisetaxratesforgreenteaandifitisconcludedthatgreenteabeverageproductsarenotentitledtotaxexemption,allgreenteabeveragemanufacturerswillbeadverselyaffectedastheincreasingtaxburdenwillhurttheirbottomlines.Tomitigatesuchpotentialundesirable impact, theCompanywill focusoncost control, advanced technologiesandeffectivemanagementwhichaltogethercansignificantlyreduceouroperatingexpenses,thusoffsettingthepotentialincreaseintaxexpenseinthefuture.

• RiskfromFloodDisasterThe 2011 flood crisismaterially affected theCompany’s production and distribution plan.RojanaIndustrialParkbuiltafloodwallof6metersinheightarounditscompound.Theconcretewallbasewas3metersbelowthegroundlevelanditstopwasalso3metersabovethegroundlevel.Inaddition,theCompanyhastakenout insurancewhichcoversallpossibledamageandplannedto invest inoverseasjointventureandfactoryconstruction.

• RiskfromMajorityControlbythePassakornnateeGroupAsof31December2014,thePassakornnateegroup(inclusiveofMr.TanPassakornnatee’snominees),astheCompany’smajorityshareholder,owned60.0%ofthetotalpaid-upcapital.AsthePassakornnateegroupisnearlyinfullcontrolofthedecisionsoftheshareholders’meetings,theminorityshareholdersmightbeunabletocounterbalancethepowerofthemajorityshareholder,exceptformattersrequiringthe three-fourthsmajority of shareholders. ThePassakornnatee groupdoesnot have the right tovoteonagenda itemsconcerning related-party transactions related to thePassakornnateegroup.Ontheonehand,theoverwhelmingpowerofthePassakornnateegroupcontravenestheprincipleofgoodcorporategovernance.Ontheotherhand,itprovidesassurancethatMr.TanPassakornnateeandhisspousewillcontinuetheirpositionsasexecutivesofIchitanwhichtheyhavebuiltwiththeirownhandsfromscratch.InadditiontotheBoard,theCompanyalsohastheAuditCommitteeandtheNominationandRemunerationCommittee.ThescopeofauthorityanddutyoftheBoardandthecommitteeshasbeenclearlydefined.TheAuditCommitteeiscomprisedof3independentdirectorswhopossessbusinessacumenandprofessionalknowledgerelatedtofinancialstatementsandreports.Withtheirprofessionalexpertiseandqualifications,theindependentdirectorscangreatlycontributetothetransparent,effectiveandverifiableundertakingsoftheBoardandtheboardcommittees.TheCompanyhas also establishedpolicies governing transactionswith relatedparties, directors, themajorityshareholders,personswithcontrollingpowerandpersonswithpotentialconflictsofinteresttoensurethattransactionsareconductedonanarm’slengthbasisandproposedthroughtheAuditCommitteetotheBoardforapproval.Personswithconflictsofinterestshallnotbeallowedtoapprovetransactionsinvolvingthemselvesandallrelated-partytransactionswillbemonitoredbytheAuditCommitteeonaquarterlybasisandauditedbytheinternalauditors.

ANNUAL REPORT 2014

45

Operating AssetsThe Company’s core operating assets as of 31 December 2014 were:

Property, Plant and Equipment The Company’s core operating assets as of 31 December 2014 were:

Detail Ownership Net Book Value (MB) Obligation

1. Land and land improvement

• Land under the title deeds nos. 13425 and 33355 with the total area size of 75-3-80 rai. The land is in Rojana Industrial Park, Zone 8, Uthai, Ayutthaya, and houses the Company’s production factory.

• Land under the title deed no. 3172 with the total area size of 72-0-14 rai. The land is in Rojana Industrial Park, Zone 8, Uthai, Ayutthaya.

The Company

The Company

265.7

231.2

Mortgaged

2. Land and land improvement

(including interior improvement)

• Factory, office building and other buildings k under the land title deeds nos. 13425 and 33355 in Rojana Industrial Park, Zone 8, Uthai, Ayutthaya.

The Company 1,736.7 Mortgaged

3. Machinery and plant equipment

• Production machinery of the Company’s production plant in Rojana Industrial Park.

The Company 3,400.9 Mortgaged

4. Furniture and office supplies The Company 35.9 None

5. Tools The Company 54.6 None

6. Vehicles The Company 1.6 None

7. Assets under construction and installation The Company 1,068.6 NoneTotal 6,795.2

Remark: Assets as per 1.-3. above have been mortgaged with 3 banks as detailed in 4.5.7. The mortgage value of assets as per 1. and 2. is to Baht 5,687.84 million and that of asset as per 3. is Baht 3,784.50 million.

46

Service MarkAs of 31 December 2014, the Company owns the following 3 service marks:

Service Mark Registration No.

Date of Registration Service Type Period

บ54348 12 April 2011 Food and beverage

10 years from the date of registration and renewable every 10

years

บ54349 12 April 2011 Food and beverage


years

บ55390 6 October 2011 Food and beverage


years

TrademarkAs of 31 December 2014, the Company owns 29 trademarks as follows:

Domestic

Trademark Registration No.

Date of Registration

Type of Product Period

Kor372021(Thailand)

30 November 2011Fruit juice,

syrup, water and mineral water


years

Kor372022(Thailand)

30 November 2011

Coffee, tea, cocoa, coffee substitute and RTD green tea


years

Kor383448(Thailand)




years

Kor383458(Thailand)

30 November 2011



years

ANNUAL REPORT 2014

47




Kor346374(Thailand)

5 March 2012

Beer, ale, black beer, mineral water, mineral

water, soda drink, non-alcoholic

beverage, syrup and beverage

ingredient


years

Kor371265(Thailand)

30 November 2011



years

Kor386674(Thailand)




years

Kor371264(Thailand)




years

Kor371263(Thailand)

30 November 2011



years

Overseas




11432/2012

(Myanmar)1 October 2012

Tea, green tea and tea-mixed

beverage

1 October 2012 – 30 September 2015Renewable upon agreement expiry

as agreed between the parties to the

agreement

11433/2012

(Myanmar)2 October 2012

Non-alcoholic beverage

2 October 2012 – 1 October

2015Renewable upon agreement expiry

as agreed between the parties to the

agreement

48




T1213049I(Singapore)

5 September 2012Tea, green tea and tea-mixed

beverage


years

T1213048J(Singapore)


beverage


years

011159068(27 Eurozone

countries)14 January 2013

Tea, green tea and tea-mixed

beverage

10 years from the date of registration

971686(New Zealand)

22 January 2013Tea, green tea and tea-mixed

beverage


27068(Lao)

10 May 2013Tea, green tea and tea-mixed

beverage


27069(Lao)

10 May 2013Non-alcoholic

beverage10 years from the date

of registration

302787788(Hong Kong)

1 November 2013Tea, green tea and tea-mixed

beverage


302787779(Hong Kong)

1 November 2013Non-alcoholic


of registration

49533/14(Cambodia)

1 January 2013Tea, green tea and tea-mixed

beverage


49534/14(Cambodia)

1 January 2013Non-alcoholic


of registration

2012056944(Malaysia)


beverage


2012056945(Malaysia)

5 September 2012Non-alcoholic


of registration

01650792(Taiwan)

16 June 2014Tea, green tea and tea-mixed

beverage


01650792(Taiwan)

16 June 2014Non-alcoholic


of registration

ANNUAL REPORT 2014

49




48,220(Brunei)

10 July 2012Tea, green tea and tea-mixed

beverage


48,220(Brunei)

10 July 2012Non-alcoholic


of registration

1512052(Australia)


beverage


1512052(Australia)

10 September 2013Non-alcoholic


of registration

Bireley’s

As of 31 December 2014, the Company owns 25 trademarks as follows:




351117(Thailand)

16 May 2014

Coffee, tea, cocoa, chocolate-

mixed drink, candy, ice cream, flavored ice and flavor essence

excluding essential oil

10 years from the date of registration and

perpetually renewable every 10 years.

369430(Thailand)

16 May 2014 Bottle



425983(Thailand)

16 May 2014

Juice-mixed beverage, non-

carbonated soda and carbonated soda, fruit juice



351116(Thailand)

16 May 2014

Flavored milk, yoghurt, frozen

yoghurt and marmalade jam



50




425984(Thailand)

16 May 2014

Juice-mixed beverage, non-

carbonated soda and carbonated soda, fruit juice



434390(Thailand)

16 May 2014Soda, mineral andcarbonated drink



434389(Thailand)




369670(Thailand)

16 May 2014 Bottle



348221(Thailand)




17134 (ประเทศเวียดนาม)

30 September2014

Beer, mineral water,

soda drink, nonalcoholic

beverage,juice drink, juice,syrup and drink

ingredient



KH/3279/93(Cambodia)

21 July 2014

Beer, mineral water,

soda drink, nonalcoholic

beverage,juice drink, juice,syrup and drink

ingredient



40-319639 (Korea)

30 May 2014 Soda drink



ANNUAL REPORT 2014

51




40-43998(Korea)

30 May 2014 Ice



8051/2014 (Myanmar)

27 June 2014

Beer, mineral water, soda drink,

non-alcoholic beverage, juice

drink, juice, syrup and drink

ingredient



T5316335I(Singapore)

16 June 2014




T5316336G (Singapore)

16 June 2014




T7460498B (Singapore)

16 June 2014

Beer, mineral water, carbonated

drink, non-alcoholic

beverage, juice drink, juice,

syrup and drink ingredient



620267(Taiwan)

18 June 2014

Milk, milk powder, butter,

yoghurt and cheese



636051(Taiwan)

18 June 2014

น�้าแข็ง,ไอศครีม,น�้าผลไม้,น�้า,น�้าแร่,ชา,กาแฟ,โกโก้,โคล่าและสปอร์ตดริ้งค์



778887(India)

30 May 2014กาแฟ,ชา,โกโก้,กาแฟเทียม,ชาเขียว

พร้อมดื่ม



52




778888(India)

30 May 2014

Beer, mineral water, soda drink,

non-alcoholic beverage, juice

drink, juice, syrup and drink

ingredient



4-2001-00259(Philippines)

30 May 2014Non-carbonated

drink



19741340(Hong Kong)

30 December 2014Non-alcoholic beverage, juice and soda drink



19500327AB(Hong Kong)

30 December 2014Syrup and

non-carbonated drink



19520606AA(Hong Kong)

30 December 2014Food ingredient, mineral water and root beer



All other products are in the trademark registration process.

Intangible AssetAs of 31 December 2014, the Company’s intangible assets are software worth Baht 2.5 million and the exclusive right to use the trademark worth Baht 84.1 million, totaling Baht 86.6 million.

Summary of Agreements1. Manufacturing Agreement

The Company entered into manufacturing agreements with various manufacturers to manufacture beverage products of the Company. The agreements include provisions about the product manufacturing and delivery specifications, beverage formula, rights to the beverage formula (prior written consent from the Company is required for use of the Company’s product formula), protection of business confidentiality, prices, and payment terms. Generally, the agreements have the term of 1 year from the signing date. Each party to the agreement has the right to terminate the agreement in the event of agreement breach. The parties to the agreement may agree on the renewal upon the agreement expiry.

ANNUAL REPORT 2014

53

2. Raw Material Supply Agreement

The Company has entered into raw material supply agreements with several suppliers of key raw materials such as tea leaves, syrup, white sugar and artificial flavors. The agreements include specifications of raw materials, prices and payment terms. Generally, the agreements have the term of 1 year from the signing date. Each party to the agreement has the right to terminate the agreement in the event of agreement breach. The parties to the agreement may agree on the renewal upon the agreement expiry.

3. Package Supply Agreement

The Company has entered into package supply agreements for preform and UHT boxes and labels with several suppliers. The agreements include provisions about the package specifications, prices, payment terms and delivery. Generally, the agreements have the term of 1-3 years from the signing date. Each party to the agreement has the right to terminate the agreement in the event of agreement breach. The parties to the agreement may agree on the renewal A) upon the agreement expiry or B) perpetual renewal until an agreement termination notice is given.

4. Natural Gas Purchase and Sale Agreement

The Company has entered into a natural gas purchase and sale agreement with PTT Natural Gas Distribution Company Limited with the term of 7 years and the quantity and price of natural gas supply have been fixed throughout the agreement term. The parties to the agreement agree to conclude the terms and conditions of each agreement within 30 calendar days prior to the agreement expiry; otherwise it shall be deemed that the agreement is terminated upon its expiry date.

5. Land and Office Lease Agreement

Counterparty Location Condition/Fee Period

Office Building Lease... Agreement

• Lessee: Ichitan Group Pcl.

• Lessor: Charn Issara Development Pcl.

Agreement date: 11 August 2013

• 28th Fl., Charn Issara Tower II, 28th Fl. (corridor) with the area size of 13.56 sq.m.

• Lease fee of Baht 2,712/month

• 11 August 2013 – 10 August 2016

• Renewable upon agreement expiry as mutually agreed between the parties to the agreement

54

Counterparty Location Condition/Fee Period

Office Building Lease... Agreement

• Lessee: Ichitan Group Pcl.

• Lessor: Bangkok Commercial Property Fund

Agreement date: 11 August 2013

• 28th Fl., Charn Issara Tower II, Unit F28/A (partial), B, C, D, 2922/300 (partial), and 2922/301-303 with the area size of 901.55 sq.m.

• Lease fee of Baht 180,310/month

• 11 August 2013 – 10 August 2016

• Renewable upon agreement expiry as mutually agreed between the parties to the agreement

6. Distributor Agreement

Counterparty Condition Period

Distributor Agreement...

Manufacturer: Ichitan Group Pcl.

Distributor: Boonrawd Asia Co., Ltd.

Agreement date: 9 October 2014

• To be the sole distributor for RTD beverage products listed in the agreement and its appendix and amendments at the agreed prices.

• All distribution channels in Thailand, except for modern trade channel.

• 1 November 2014 – 30 October 2017

• Renewable upon each agreement expiry.

• In the event of agreement breach, a party to the agreement which does not breach the agreement may initiate the agreement cancellation.



Distributor: DKSH (Thailand) Co., Ltd.

Agreement date: 14 January 2011

• To be the sole distributor for beverage products listed in the agreement and its appendix and amendments at the agreed prices.

• All distribution channels in Thailand, inclusive of modern trade and traditional trade channels.

• 1 February 2011 – 31 January 2016

• Automatic renewal for 3 years, unless a party to the agreement notifies another party of its intent not to renew the agreement at least 6 months prior to the agreement expiry.


ANNUAL REPORT 2014

55

Counterparty Condition Period



Distributor: Ichitan Trading Co., Ltd. (currently I Am Green Tea Co., Ltd.)

Agreement date: 20 June 2014

• To be the sole distributor for beverage products listed in the agreement and its appendix and amendments at the agreed prices.

• All distribution channels in Thailand, except for modern trade channel.

• 1 July 2014 – 30 June 2017

• Renewable upon each agreement expiry.


7. Loan Agreement

Loan agreement with Bank No. 1 worth Baht 972.0 million

Signing date 4 April 2012

Agreement .. Loan agreement and the annex to the loan agreement dated 4 April 2012

Borrower .. Ichitan Group Pcl.

Purpose .. To finance the land acquisition and development costs and machinery acquisition costs

Facility .. Long-term loan worth Bath 972.0 million maturing on 31 March 2021

Interest rate (%).. Initial drawdown – 31 December 2012 4.0%

1 January 2013 – 31 March 2015 MLR - 2.3%

After 31 March 2015 MLR – 2.1%

Term of repayment .. • Monthly repayment, starting from April 2014:

April 2014 – March 2015: Baht 1.7 million/month






April 2020 – February 2021: Baht 15.9 million/month

March 2021: Baht 24.3 million

• Interest payment shall be made monthly on the last business day of each month, starting from the month the initial drawdown is made.

56

Loan agreement with Bank No. 1 worth Baht 600.0 million

Signing date 14 October 2014

Agreement Loan agreement

Borrower Ichitan Group Pcl.

Purpose To finance the machinery investment for bottled drink production

Facility Long-term loan worth Baht 600 million

Interest rate (%) Initial drawdown – final installment BIBOR (6M) +1.25 p.a.

Term of repayment ... • Monthly repayment, starting from October 2015:

a. Installments 1-83: Baht 7.14 million/installment b. Final installment: The remaining amount

• Interest payment shall be made monthly at the end of each month, starting from the month the initial drawdown is made.

Collateral... • Mortgage of machinery and equipment.

• Mortgage of land and buildings under the following title deeds:

Existing collateral as per the agreement dated 29 March 2011 for the loan worth Baht 1,663.0 million

- Title deeds nos. 13425 and 33355 of the lands in Ayutthaya owned by Ichitan Group Pcl., with the mortgage value of Baht 3,765.5 million.

Key terms and ..conditions

• Debt service coverage ratio (DSCR)*: 1.25x

• Debt to equity ratio (D/E**): 2.8x

• Mr. Tan Passakornnatee and his family must maintain the shareholding at 30% of the registered capital or higher.

Collateral .. • Mortgage of machinery and equipment.


Existing collateral as per the agreement dated 29 March 2011 for the loan worth Baht 1,663.0 million

- Title deeds nos. 13425 and 33355 of the lands in Ayutthaya owned by Ichitan Group Pcl., with the mortgage value of Baht 3,765.5 million.

Key terms and ..conditions




ANNUAL REPORT 2014

57

Loan agreement with Bank No. 2 worth Baht 1,860.0 million

Signing date... 20 August 2012

Agreement... Bridge Loan Credit Facility Agreement and Guarantee Agreement

Medium-Term Loan Credit Facility Agreement and Guarantee Agreement

Revolving Credit Facility Agreement and Guarantee Agreement

Borrower... Ichitan Group Pcl.

Purpose... • Bridge loan credit facility agreement and guarantee agreement for the acquisition of machinery and equipment (uncommitted credit line

• Medium-term loan credit facility agreement and guarantee agreement to finance the repayment of the bridge loan which finances the machinery investment in new production line and automated storage system (uncommitted credit line)

• Revolving credit facility agreement and guarantee agreement for use as working capital, equipment acquisition, and L/G for electricity and import duty expenses (uncommitted credit line)

Credit limit... Bridge Loan Medium-Term Loan Revolving Credit

Baht 990.0 million Baht 770.0 million Baht 100.0 millionInterest rate (%) USD facility: SIBOR (6M) +

1.5%

THB facility: BIBOR (6M) + 1.25%

Facility in other currencies:

Cost of finance + 1.50%

BIBOR (6M) + 1.25% L/T: BIBOR + 1.0%

O/D: MOR-2.5%

LG: 1.0%

Term of repayment... 360 days. The outstanding of bridge loan will be refinanced as a term loan which shall not exceed the forced sale value of collateral.

5 years from the initial drawdown (the loan must be drawn by 22 February 2014).

Quarterly repayment shall be made in 19 installments. The first repayment shall be made within 6 months from the initial drawdown.

-

58

Loan agreement with Bank No. 3 worth Baht 1,000.0 million

Signing date 12 July 2013

Agreement Loan agreement

Borrower Ichitan Group Pcl.

Purpose To finance the production machinery acquisition for Phase 2 of the project

Facility Long-term loan worth Baht 1,300.0 million with the tenor of 7 years

Interest rate (%).. Years 1-2 CIMB T’s MLR - 2.625%

Years 3 onwards CIMB T’s MLR - 2.0%

Term of repayment.. • Grace period of 12 months from the initial drawdown.

• BulletrepaymentwithmonthlyrepaymentofBaht25.0million.ย

• Interest payment on 1st of each month, starting from the month the initial drawdown is made.

Collateral.. • Mortgage of machinery and equipment.


Third mortgage of the land in Ayutthaya owned by Ichitan Group Pcl. under the title deeds nos. 13425 and 33355 with the mortgage value of up to Baht 1,902.3 million (pending mortgage registration).

Key terms and..conditions


• Dividend payment is prohibited where DSCR is below 1.25x. If DSCR is higher than 1.25x, the Company is unconditionally allowed to make dividend payment following its SET-listing in accordance with its Dividend Policy and performance and the economic conditions.


Collateral... • Mortgage of machinery and equipment owned by Ichitan Group Pcl. with the mortgage value of Baht 924 million.

• Second mortgage of the land in Ayutthaya owned by Ichitan Group Pcl., under the title deeds nos. 13425 and 33355, with the mortgage value of Baht 20 million.

Key terms and...conditions

• Maintenance of the borrower’s businesses, including all rights, privileges and franchises rights.

ANNUAL REPORT 2014

59

8. Insurance

• Production Plant in Ayutthaya

The Company has taken out insurance with Siam Commercial Samaggi Insurance Pcl. for protection of the plant and properties as detailed below:

Factory Phase 1 Phase 2Signing date 29 May 2014

Type of insurance Property insurance

Coverage 29 May 2014 – 29 May 2015

Sum insured Baht 5,700 million

The insured Ichitan Group Public Company Limited

Insured location 111/1 Moo 4, Rojana Industrial Park, Zone 3, Uthai, Ayutthaya

Insured properties 1. Buildings, walls, fences and utilities

2. Machinery and parts, tools, and equipment and spare parts

3. Furniture, fixture, and office equipment and supplies

4. Raw materials, inventory, and all packages

5. Other properties of the insured

Perils covered Fire, lightning, explosion, aircraft damage, water damage, impact damage from vehicles, smoke, storm, bush fire, flood, hail, earthquake, volcano eruption, tsunami, strike, riot, malicious damage, spontaneous combustion or natural explosion and unexpected accidents caused by external factors or any other perils not specified as exceptions in the GIA form.

Key terms and..conditions


• The borrower agrees not to materially change the major shareholders or the management structure whereas Mr. Tan Passakornnatee must and his family must maintain the shareholding at 30% of the registered capital or higher. In addition, Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee must be the chairman and the member of the Executive Committee of the Company throughout the loan period, unless changes thereto are notified to and approved by the lender in advance. (The IPO launch had been approved by the lender.)

60

Factory Phase 1 Phase 2Terms and conditions Excess

1) Baht 5,000 for each and every loss, except for loss caused by fire, lightning, explosion, impact damage from vehicles, aircraft damage and smoke.

2) A minimum of Baht 10,000 or 10%, whichever is higher, of the loss caused by each and every accident to properties, machinery and electrical breakdown, boiler and pressure vessel damage, damage to electronic devices, computers and processors, theft without forcible entry, robbery and burglary.

3) A minimum of Baht 100,000 or 10%, whichever is higher, of the loss to properties caused by each and every accident which includes flood, storm, hail, earthquake, volcano eruption or tsunami, strike, riot or malicious act.

• Office Building

The Company has taken out insurance LMG Insurance Pcl. for partial protection of the head office located at Charn Issara Tower II as detailed below:

Factory Phase 1 Phase 2Signing date 1 January 2014

Type of insurance Property insurance

Coverage 1 January 2014 – 1 January 2015

Sum insured Baht 10 million

The insured Ichitan Group Public Company Limited

Insured location 2922/301-303, 28th Fl., Charn Issara Tower II, New Petchburi Road, Bangkapi, Huaykwang, Bangkok, 10310

Insured property Furniture, fixtures, office supplies and equipment, computers, electrical appliance, and accessories of shops and other properties of the insured (exclusive of computers, laptops, iPod, iPad, tablets and other accessories)

Perils covered Fire, lightning, storm, earthquake, volcano eruption, tsunami, hail, water damage, impact damage from vehicles, aircraft damage, smoke, explosion, strike, riot, malicious damage and unexpected accidents caused by external factors or any other perils not specified as exceptions in the GIA form.

Limited liability: The maximum flood coverage shall be Baht 1,000,000 per flood claim and throughout the coverage period.

Other conditions Excess

1) Baht 5,000 for each and every loss caused by external factors, except for perils covered by this insurance policy.

2) 10% or a minimum of Baht 100,000 per claim and for every flood claim.

ANNUAL REPORT 2014

61

Policy on Investment in Subsidiaries and Associate CompaniesAs the Company’s management team is highly experienced in beverage business, the Company has a policy to focus on beverage business investments, excluding alcoholic beverage, at the proportion which allows the Company to have the authority to manage and set business direction for entities in which it has invested. The Company does not have a plan to make any new investment in the near future.

62

Legal disputes

Company and the subsidiaries had no legal dispute that significantly affected the Company’s business or posed negative effects on the Group’s assets of which its overall value, as at 31 December 2014, was higher than 5% of shareholders’ equity. The Company and the subsidiaries had no legal dispute arisen from an out-of-the-ordinary course of business of the Group either.

ANNUAL REPORT 2014

63

Information of Securities and Shareholders

Ordinary SharesRegistered and paid-up capital as of 31 December 2014

Registered capital is worth Baht 1,300,000,000 (one billion three hundred million baht), divided into 1,300,000,000 shares (one billion three hundred million shares) at the par value of Baht 1.00 per share.

Paid-up capital was worth Baht 1,300,000,000 (one billion three hundred million baht), divided into 1,300,000,000 shares (one billion three hundred million shares) at the par value of Baht 1.00 per share.

ShareholdersMajor shareholders per the shareholders register as of 28 August 2014:

No. Name-Surname No. of Share %Shareholders in Mr. Tan and Mrs. Eng Passakornnatee’s Group

1 Mr. Tan Passakornnatee 180,000,000 13.85

2 Mrs. Eng Passakornnatee 120,000,000 9.23

3 Mr. Jaruworn Sukpanthaworn 88,767,200 6.83

4 Miss Supanee Sukpanthaworn 40,473,000 3.11

5 Mr. Jaruwat Sukpanthaworn 40,000,000 3.08

6 Miss Varisa Passakornnatee 30,000,000 2.31

7 Mrs. Jamnien Sukpanthaworn 5,150,000 0.40

8 Miss Tantita Passakornnatee 1,280,000 0.10

9 Miss Sukanya Sukpanthaworn 1,250,000 0.10

Total shares held by shareholders in Mr. Tan and Mrs. Eng Passakornnatee’s Group 506,920,200 38.99

Nominee of Mr. Tan Passakornnatee

10 Miss Supaporn Jaroensopa 80,370,000 6.18

11 Miss Jinda Songrod 50,518,000 3.89

64

No. Name-Surname No. of Share %12 Miss Wanwimon Nilpruek 80,370,000 6.18

13 Miss Nisakorn Induang 40,205,000 3.09

14 Miss Vichitra Hematurin 40,107,500 3.09

15 Miss Araya Panichayanon 20,926,600 1.61

Total shares held by nominees of Mr. Tan Passakornnatee 272,487,100 272,487,100

Total shares held by shareholders in Mr. Tan and Mrs. Eng Passakornnatee’s Group and nominees of Mr. Tan Passakornnatee 779,407,300 59.95

16 Mr. Chiu Yueh-Chin 62,842,000 4.83

Other Securities-None-

Dividend PolicyThe Company will pay dividend at the rate of at least 40% of net profits after corporate income tax and legal reserve. The dividend payment shall be made at least once each year based on the Company’s consolidated financial statements, subject to the shareholders’ approval.

However, all dividend payments are subject to cash flows, investment plans, economic conditions, operating results, financial performance, liquidity of the Company and other factors as appropriate and necessary for the Company’s future business. The dividend payment shall not exceed the retained earnings shown in the separate financial statements of the Company and/or shall not have material impact on the Company’s normal business operations. The Board of Directors shall have the power to approve the interim dividend payment and shall report the matter to the subsequent shareholders’ meeting.

In 2014, the Company paid the dividend from 2014 operating results and retained earnings at the rate of Baht 1.00 per share. The interim dividend at the rate of Baht 0.50 (fifty satang) was approved by the Board Meeting on 13 August 2014 and paid to the shareholders on 12 September 2014, totaling Baht 650 million. The final dividend payment at the rate of Baht 0.50 (fifty satang) was approved by the Board Meeting No. 1/2015 on 25 February 2015 and will be paid to the shareholders on 25 May 2015, totaling Baht 650 million

ANNUAL REPORT 2014

65

and subject to the shareholders’ approval. Thus, the total dividends amounted to Baht 1,300 million or 120.5% of the 2014 net profit. Such dividend payments are in accordance with the Company’s Dividend Policy.

Dividend Payments

Detail 2014Dividend (Baht per share) 1.00

Interim dividend 0.50

Final dividend 0.50

Dividend payout ratio 120.50

66

Management Structure

Risk Management Committee

Executive Committee

Nomination and Remuneration Committee

Internal Audit Mr. Sumol Hobamphen

CEOMr. Tan Passakornnateee

Senior Executive Vice PresidentMrs. Eng Passakornnateee

Consultant

Design Department

Marketing Communication

Department

Legal Department

Human Resources

Department

Procurement Department

Marketing Communication

Department

Audit Committee

Executive Vice PresidentAccounting & Finance

Mr. Preecha Augcharanonda

Executive Vice PresidentBeverage Department

Mr. Tanapan Khongnuntha

Executive Vice PresidentFactory DepartmentMr. Viroj Supasoon

Vice PresidentAccounting & Finance

Mr. Apichat Sukachirawat

Senior Vice PresidentBeverage Department

Board of Directors

Remark: Mr. Chiu Yueh-Chin is the Company’s production consultant

ANNUAL REPORT 2014

67

Ichitan Group Public Company Limited has the Board of Directors and the Audit Committee which have distinct and clearly defined scope of duties and responsibilities as follows:

Board of DirectorsAs of 31 December 2014, the Board is composed of 9 directors:

1. Mr. Tan Passakornnatee Chairman

2. Mrs. Eng Passakornnatee Vice Chairman

3. Mr. Chiu Yueh-Chin* Director



6. Miss Araya Panichayanon Director

7. Avm. Nathawat Nimmolthanakorn** Independent Director and Chairman of Audit Committee

8. Mr. Prasan Limpipatanakul Independent Director and Audit Committee

9. Mr. Issarachai Decharit Independent Director and Audit Committee

10. Mr. Apichat Sukachirawat Company SecretaryRemark: * The Board Meeting No. 3/2014 dated 13 August 2014 resolved to appoint Mr. Chiu Yueh-Chin as a director in replacement for Mr. Preecha Augcharanonda who resigned as director on 13 August 2014.** Avm. Nathawat Nimmolthanakorn is formerly known as Avm. Paitoon Reejinda.

Authorized SignatoriesMr. Tan Passakornnatee or Mrs. Eng Passakornnatee shall co-sign with Mr. Chiu Yueh-Chin or Mr. Viroj Supasoon or Mr. Tanapan Khongnuntha or Miss Araya Panichayunont and affix the Company’s seal to legally bind the Company.

Scope of Authority, Duty and Responsibility of Board of Directors

1. The Board has authority, duty and responsibility to manage and operate the Company’s business according to laws, objectives, Articles of Association, the resolution of the shareholders’ meeting with honesty and due care to protect the Company’s benefits.

2. To hold a Board meeting at least once every 3 months.

3. To ensure that the balance sheet and income statement of the Company as of the end the accounting period are audited and proposed to the shareholders’ meeting for approval.

4. To review and approve the Company’s policies, directions, strategies and business plans proposed by the management team.

5. To formulate the enterprise-wide Risk Management Policy and to monitor the risk management systems and procedures to effectively mitigate and control the risk impact on the Company’s business.

68

6. To set the directions, policies, business plans and budget plans and undertake monitoring and supervision of the business operations executed by the management team to ensure effective and efficient implementation of such policies, business plans and budget plans.

7. To approve the management structure and the appointment and authority scope of the Executive Committee, CEO and other committees as appropriate.

The appointment and authority delegation shall in no way empower the Executive Committee to consider or approve transactions that may have conflicts of interest between the Company and affiliates, unless specific guidelines for handling such transactions that have been approved by the Board are complied with.

8. To prepare the Board’s annual report and to be responsible for the preparation and release of the Company’s financial statements to disclose the financial positions and performance in the past year which shall be approved by the shareholders’ meeting.

9. The Board may delegate to a director or directors or other persons the authority to perform acts on its behalf and under its supervision or may authorize that person perform any duties during a specific period. The Board may cancel, revoke or change the authorization when appropriate. The Board may delegate a director, directors or other persons to perform acts on its behalf and under its supervision; or delegate to such persons the authority within the scope as the Board deems appropriate. Such delegation may be annulled or amended or re-assigned to other persons as the Board deems appropriate.

Such delegation shall not explicitly or implicitly vest such persons with the power to consider and approve transactions involving conflict of interest between themselves or their related parties and Company or its subsidiaries (if any) (according to the definitions under the notifications issued by the Capital Market Supervisory Board and/or the SET and/or other relevant authorities), unless otherwise permitted by applicable policies and criteria previously approved by the Board.

The Board held 9 meetings in 2013 and 5 meetings in 2014 and details of the meeting attendance are as shown below:

Name - SurnameBoard of Directors

2013 2014

1. Mr. Tan Passakornnatee 9/9 5/5

2. Mrs. Eng Passakornnatee 9/9 5/5

3. Mr. Preecha Augcharanonda 8/8 2/2

4. Mr. Chiu Yueh-Chin - 4/4

5. Mr. Viroj Supasoon 8/8 5/5

6. Mr. Tanapan Khongnuntha 7/8 5/5

7. Ms. Araya Panichayanon 8/9 5/5

8. AVM. Nathawat Nimmolthanakorn 8/8 5/5

9. Mr. Prasan Limpipatanakul 8/8 5/5

10. Mr. Issarachai Decharit 8/8 4/5

ANNUAL REPORT 2014

69

Audit CommitteeAs of 31 December 2014, the Audit Committee is composed of 3 members:

1. Avm. Nathawat Nimmolthanakorn Chairman of Audit Committee and Independent Director2. Mr. Prasan Limpipatanakul* Audit Committee Member and Independent Director3. Mr. Issarachai Decharit Audit Committee Member and Independent Director Mr. Sumol Hobumphen Secretary to Audit Committee

Notation: * Mr. Prasan Limpipatanakul has knowledge and experience in accounting and finance.

Scope of Authority, Duty and Responsibility of Audit Committee

1. To review the Company’s financial reporting to ensure the accuracy and adequacy thereof.

2. To review the appropriateness and effectiveness of the Company’s internal control and internal audit systems, assess the independence of the internal audit team, and endorse the appointment, job transfer and employment termination of head of internal audit team or any other teams responsible for the Company’s internal audit.

3. To review and ensure the Company’s compliance with the Securities and Exchange Act, the SET’s requirements and the laws governing the Company’s business.

4. To consider, screen and nominate an independent auditor, propose audit fee and attend a meeting with the auditor without management’s participation at least once every year.

5. To review connected transactions and transactions with potential conflicts of interest in accordance with the laws and the SET’s requirements to ensure that such transactions are reasonable and contribute to the Company’s best interest.

6. To prepare the Audit Committee’s Report which is part of the Company’s annual report. The Audit Committee’s Report must be signed by the Chairman of the Audit Committee and entails, at a minimum, the following:

(a) Opinions on the accuracy, completeness and reliability of the Company’s financial statements.

(b) Opinions on the adequacy of the Company’s internal controls.

(c) Opinions on the Company’s compliance with the Securities and Exchange Act, the SET’s rules and requirements and other laws applicable to the Company’s business.

(d) Opinions on the suitability of the auditor.

(e) Opinions on transactions with conflicts of interest.

(f) Number of the Audit Committee’s meetings and attendance report of each Audit Committee member.

(g) Opinions or observations of the Audit Committee on matters gained from their performance of duties under the Audit Committee’s charter.

(h) Any other items which the Audit Committee views that should be made known to the shareholders and the general investors in accordance with the scope of duties and responsibilities assigned by the Board.

70

7. Perform any other duties as assigned by the Board, subject to the Audit Committee’s approval thereof.

The Audit Committee held 9 meetings in 2013 and 5 meetings in 2014 and details of the meeting attendance are as shown below:

Name - SurnameAudit Committee

2013 2014

1. Avm. Nathawat Nimmolthanakorn 9/9 5/5

2. Mr. Prasan Limpipatanakul 9/9 5/5

3. Mr. Issarachai Decharit 9/9 4/5

Risk Management CommitteeAs of 31 December 2014, the Risk Management Committee is composed of 4 members:

1. Mrs. Eng Passakornnatee Chairman of Risk Management Committee

2. Avm. Nathawat Nimmolthanakorn Risk Management Committee Member

3. Mr. Viroj Supasoon Risk Management Committee Member

4. Mr. Tanapan Khongnuntha Risk Management Committee Member

Mr. Apichat Sukachirawat Secretary to Risk Management Committee

Scope of Authority, Duty and Responsibility of Risk Management Committee

1. To formulate integrated risk management policies and framework which cover key risks such as business risk and operational risk.

2. To assess potential risks from internal and external factors and their impact on the organization.

3. Monitor progress of the implementation of the Company’s risk management plan.

4. To inform the Audit Committee of key risks which have impact on internal controls.

5. To report risks and risk management measures to the Board.

6. To perform any other duties as assigned by the Board.

The Risk Management Committee held 4 meetings in 2013 and 4 meetings in 2014 and details of the meeting attendance are as shown below:

Name - SurnameRisk Management Committee 2013 2014


2. Avm. Nathawat Nimmolthanakorn 4/4 4/4



ANNUAL REPORT 2014

71

Nomination and Remuneration CommitteeAs of 31 December 2014, the Nomination and Remuneration Committee is composed of 3 members:

1. Mr. Issarachai Decharit Chairman of Nomination and Remuneration Committee

2. Mr. Prasan Limpipatanakul Nomination and Remuneration Committee Member

3. Mrs. Eng Passakornnatee Nomination and Remuneration Committee Member

Mr. Apichat Sukachirawat Secretary to Nomination and Remuneration Committee

Remark: The 3 members of the Nomination and Remuneration Committee were appointed on 13 August 2014.

Scope of Authority, Duty and Responsibility of Nomination and Remuneration Committee

Nomination

1. To set criteria and policies for the nomination of members of the Company’s Board of Directors and board committees in view of the structure, composition and member qualifications before proposing thereof to the Board and/or the shareholders’ meeting as applicable for approval.

2. To screen and nominate candidates for directorships for vacancies from retirement and/or resignation and/or new position.

3. To perform any other acts related to the nomination process as assigned by the Board.

4. To evaluate performance of CEO and propose the evaluation to the Board for approval.

Remuneration

1. To develop remuneration criteria and policies applicable to the Board of Directors and board committees prior to proposal thereof the Board and/or the shareholders’ meeting as applicable for approval.

2. To determine financial and non-financial remuneration of individual members of the Board in view of their scope of duties, responsibilities and performance, comparable industry benchmark and expected benefits from such directors prior to proposal thereof through the Board to the shareholders’ meeting for approval.

3. To be responsible for the Board and provide clarification and response to questions related to directors’ remuneration at the shareholders’ meeting.

4. To disclose policies, principles/rationale supporting the proposed remuneration of directors and executives in the annual filing form (Form 56-1) and the Company’s annual report.

5. To perform any other remuneration-related duties as assigned by the Board.

72

As of 31 December 2014, the Nomination and Remuneration Committee held 2 meetings and details of the meeting attendance are as shown below:

Name - SurnameNomination and Remuneration Committee

2014

1. Mr. Issarachai Decharit 2/2

2. Mr. Prasan Limpipatanakul 2/2

3. Mrs. Eng Passakornnatee 2/2

Executive CommitteeAs of 31 December 2014, the Executive Committee of is composed of 5 members as follows:

1. Mr. Tan Passakornnatee Chairman

2. Mrs. Eng Passakornnatee Member

3. Mr. Preecha Augcharanonda Member

4. Mr. Viroj Supasoon Member

5. Mr. Tanapan Khongnuntha Member

Mr. Apichat Sukachirawat Secretary to Risk Management Committee

Scope of Authority, Duty and Responsibility of Executive Committee

1. The Executive Committee shall have the authority to execute policies of the Board under the laws and the Company’s rules and regulations, except for matters which the laws stipulate as being subject to the approval from the shareholders’ meeting.

2. To formulate and recommend to the Board the Company’s business policies, directions and strategies.

3. To propose business plans, managing authority, business plans and budget plans to the Board for approval and execute the Company’s business plans and strategies in accordance with the policies and business plans presented to the Board.

4. To execute the Company’s general affairs and determine the organizational and management structures and the human resources management process, from recruitment to training, employment and employment termination.

5. To approve the Company’s filing of credit or loan applications with banks including guarantee, payment or disbursement transactions of the Company in its normal course of business such as investment and payment of expenses. Each transaction shall be capped at Baht 200 million or its equivalent or at the amount approved by the Board. Change to the said limit is subject to the Board’s approval.

6. To approve the opening of deposit accounts with banks and to specify payment amount authorizers of the Company’s deposit accounts.

ANNUAL REPORT 2014

73

7. To approve the budget for salary increase or annual merit increase and bonus payment to employees, except for CEO and above.

8. To approve the appointment and removal of the Company’s employees below CEO level.

9. To perform any other duties as assigned.

The delegation of authority and duty by the Executive Committee shall not explicitly or implicitly vest the attorneys-in-fact appointed through power delegation or sub-delegation to approve transactions involving conflict of interest between themselves or their related parties according to the definitions under the notifications issued by the Capital Market Supervisory Board and/or the SET and/or other relevant authorities) and Company or its subsidiaries and/or related companies. Such transactions are beyond the scope of authority of the Executive Committee and must be approved by the Board or the shareholders’ meeting (as applicable), unless otherwise classified as transactions in normal course of business and on an arm’s length basis according to the definitions determined by the Market Supervisory Board and/or the SET and/or relevant authorities.

The Executive Committee held 6 meetings in 2013 and 12 meetings in 2014 and details of the meeting attendance are as shown below:

Name - SurnameExecutive Committee

2013 2014

1. Mr. Tan Passakornnatee 6/6 12/12


3. Mr. Preecha Augcharanonda 6/6 12/12



Chief Executive OfficerThe Board Meeting No. 6/2013 dated 17 June 2013 resolved to appoint Mr. Tan Passakornnatee as Chief Executive Officer with the scope of authority, duty and responsibility as detailed below:

Scope of Authority, Duty and Responsibility of Chief Executive Officer

1. To oversee business and/or routine operations of the Company.

2. To develop and propose policies, business plans, business strategies and annual budget plans of the Company through the Executive Committee to the Board for approval.

3. To execute or manage operations in accordance with policies, plans and budgets approved by the Board and/or the Executive Committee.

74

4. To regularly monitor and evaluate the Company’s performance and report the results and progress to the Executive Committee, the Audit Committee and the Board.

5. To approve the Company’s filing of credit or loan applications with banks including guarantee, payment or disbursement transactions of the Company in its normal course of business such as investment and payment of expenses. Each transaction shall be capped at Baht 100 million or its equivalent or at the amount approved by the Board. Change to the said limit is subject to the Board’s approval.

Transaction LimitPurchases and payments related to business administration Up to Baht 50 million

Asset purchase order and payment Up to Baht 50 million

Payment under contract Up to Baht 100 million

Asset amortization Up to Baht 20 million

Entertainment expense Up to Baht 20 million

Donation and promotional good expense Up to Baht 20 million

6. To approve expenses related to the Company’s operations in its normal course of business such as procurement deals whereas the limit of each transaction shall be according to the table of approval authority approved by the Board and within the annual budget approved by the Board as well as to execute agreements and contracts related to such deals.

7. To determine the organizational structure and approve the appointment, recruitment, job transfer, remuneration, compensation, bonus and employment termination of employees at senior executive vice president level and under.

8. To issue directives, regulations, announcements and statements necessary for the Company’s business operations for compliance with the policies, the Company’s benefits and sound disciplines of the Company.

9. To work with the head of internal audit team and the Audit Committee on supervision of business operations and risk management of the Company in accordance with the Company’s objectives and Articles of Association and the Corporate Governance Policy.

10. To appoint committees and working teams in order to support effective and transparent operation. CEO may delegate to a person or persons the authority to perform acts under his supervision; or delegate to such persons the authority within the scope as CEO deems appropriate. Such delegation may be annulled or amended or re-assigned to other persons as CEO deems appropriate.

11. Perform any other duties as assigned by the Executive Committee or the Board.

The delegation of authority and duty by CEO shall not explicitly or implicitly vest the attorneys-in-fact appointed through power delegation or sub-delegation to approve transactions involving conflict of interest between themselves or their related parties according to the definitions under the notifications issued by the Capital Market Supervisory Board and/or the SET and/or other relevant authorities) and Company or its subsidiaries and/or related companies. Such transactions are beyond the scope of authority of CEO and must be approved by the Board or the shareholders’ meeting (as applicable), unless otherwise classified

ANNUAL REPORT 2014

75

as transactions in normal course of business and on an arm’s length basis according to the definitions determined by the Market Supervisory Board and/or the SET and/or relevant authorities.

Management TeamAs of 31 December 2014, the Company’s management team is composed of 5 executives as follows:

1. Mr. Tan Passakornnatee Chief Executive Officer

2. Mrs. Eng Passakornnatee Senior Executive Vice President

3. Mr. Preecha Augcharanonda Executive Vice President – Accounting & Finance

4. Mr. Tanapan Khongnuntha Executive Vice President – Beverage Department

5. Mr. Viroj Supasoon Executive Vice President – Factory Department

Directors and Executives’ Holdings of SecuritiesAccording to the Company’s policy, directors and executives shall report the changes in their holdings of the Company’s securities to the Board by submitting Form 59-2 to Company Secretary who is responsible for compiling and presenting such information to the Board meeting.

No. NameNumber of Shares Number

of SharesRemark

As of 31 Dec 13

As of 31 Dec 14

Increase (Decrease)

1 Mr. Tan Passakornnatee 180,000,000 180,000,000 -

2 Mrs. Eng Passakornnatee 120,000,000 120,000,000 -

3 Mr. Chiu Yueh-Chin 64,842,000 59,858,000 (4,984,000)

4 Miss Araya Panichayanon 20,926,600 20,926,600 -

5 Mr. Viroj Supasoon 7,300,000 7,300,000 -

6 Mr. Tanapan Khongnuntha 6,700,000 6,670,000 (30,000)

7 Avm. Nathawat Nimmolthanakorn - - -

8 Mr. Prasan Limpipatanakul - - -

9 Mr. Issarachai Decharit - - -

Report on Holdings of Securities by Retiring and Resigning Director in 2013 and 2014

No. NameNumber of Shares Number

of SharesRemark

As of 31 Dec 13

As of 31 Dec 14

Increase (Decrease)

1 Mr. Preecha Augcharanonda 2,000,000 1,500,000 (500,000)

76

Company SecretaryThe Company has appointed Mr. Apichat Sukajirawat, First Senior Vice President, Accounting & Finance, as Company Secretary, effective from 18 February 2013, to perform company secretariat functions in accordance with the Securities and Exchange Act (No.4) B.E. 2551. The Board has supported and encouraged Company Secretary to continuously develop his knowledge and abilities pertaining to laws, accounting and company secretariat function through training courses and seminars. Profile of Company Secretary is as detailed below:

Name-Surname : Mr. Apichat Sukachirawat

Position : Company Secretary

Age : 49 years

Nationality : Thai

Education/ Training : Bachelor of Accounting, Ramkhamhaeng University

: DAP 106/2013, Thai Institute of Directors Association Company Secretary Program, Class 30

Shareholding (%) : 0.45

Family relationship with Executive : None

Work experience :

Year Position Company

2011 - Present Vice President, Accounting & Finance Ichitan Group Pcl.

2002 - 2011 Vice President, Accounting Department Oishi Group Pcl.

1998 - 2002 Accounting Manager Wedding Business Consultant Co., Ltd.

1995 - 1998 Accounting Manager BKK(1985) Pcl.

1994 - 1995 Accountant Thai-Denmark Swine Breeder Pcl.

Duty and Responsibility of Company Secretary

Company Secretary must perform duties as stipulated in Section 89/15 and Section 89/16 of the Securities and Exchange Act (No. 4) B.E. 2551 which has come into force since 31 August 2008 and demonstrate responsibility, due care, honesty and compliance with the laws, the Company’s objectives and Articles of Association, and the resolutions of the Board and the shareholders’ meetings. Statutory duties of Company Secretary are as follows:

1. Prepare and retain the following documents:

• Register of directors

• Invitation to Board meetings, minutes of Board meetings and annual reports of the Company.

• Invitation to shareholders’ meetings and minutes of shareholders’ meetings.

ANNUAL REPORT 2014

77

2. Retain reports on conflicts of interest of directors or executives

• Directors and executives have the duty to “report their conflicts of interest”. (It means that directors and executives have the duty to report the conflicts of interest of themselves and their related parties to the Company.)

• Company Secretary shall submit a copy of such report to the Chairman of the Board and the Chairman of the Audit Committee within 7 days from the receipt thereof.

• There must be an effective filing system to ensure that all relevant documents and evidence are retained properly and completely and are available for verification for at least 5 years from the date such documents and information are prepared.

3. To perform any other duties according to the notifications of the Capital Market Supervisory Board.

Remuneration of Director and ExecutiveThe remuneration of directors and executives has been clearly and transparently determined and are commensurate with their scope of duties and responsibilities. In addition, the remuneration has been properly reviewed based on considerations such as the Company’ best interest. Remuneration of directors and executives in 2012 – 2014 are as detailed below:

Remuneration of Board of Directors

It is the Company’s policy not to offer remunerations for service as Board members to executive directors – directors being on the Company’s management team or the Company’s employees. Only non-executive directors are entitled to remunerations, in the form of monthly salary and attendance fee, which were approved by the Board Meeting No. 1/2014 dated 7 March 2014 as detailed below:

Position Monthly Salary (THB) Attendance Fee (THB/Meeting)

Chairman of the Board 45,000 -

Board member 35,000 -

Remuneration of Audit Committee

The Board Meetings No.1/2014 dated 7 March 2014 approved the remunerations of the Audit Committees in the form of monthly salary and attendance fee as detailed below:

Position Monthly Salary (THB) Attendance Fee(THB/Meeting)

Chairman of the Audit Committee 45,000 -

Audit Committee member 35,000 -

78

Remuneration of Audit Committee in 2013 – 2014

Name – Surname PositionMonthly Salary and

Attendance Fee (THB)2013 2014

1. Avm. Nathawat Nimmolthanakorn Chairman 540,000 540,000

2. Mr. Prasan Limpipatanakul Member 420,000 420,000

3. Mr. Issarachai Decharit Member 420,000 420,000

Total 1,380,000 1,380,000

Remuneration of Executive Committee

Members of the Executive Committee are not entitled to remunerations for their positions on the Executive Committee as they are the Company’s executives.

Remuneration of Risk Management Committee

It is the Company’s policy to offer remunerations for service as Risk Management Committee members only to those who are not on the Company’s management team or are the Company’s employees. The Board Meeting No. 1/2014 dated 7 March 2014 approved the remunerations of the Board committees, in the form of monthly salary and attendance fee, as detailed below:


Chairman of each Board committee - 15,000

Member of each Board committee - 15,000

Remuneration of Risk Management Committee in 2013 – 2014

Name – Surname PositionMonthly Salary and

Attendance Fee (THB)2013 2014

1. Mrs. Eng Passakornnatee Chairman - -

2. Avm. Nathawat Nimmolthanakorn Member 30,000 60,000

3. Mr. Viroj Supasoon Member - -

4. Mr. Tanapan Khongnuntha Member - - Remark: In 2013, the Risk Management Committee held 4 meetings and the remunerations shown in the above table are for 2 meetings which were heldafter the remunerations were approved by the Board Meeting No. 6/2013 dated 17 June 2013.

ANNUAL REPORT 2014

79

Remuneration of Nomination and Remuneration Committee

According to the Company’s policy, remuneration for the Nomination and Remuneration Committee shall be paid only to members who are not the Company’s executives or employees. Monthly salary and attendance fee of the Nomination and Remuneration Committee are within the remuneration framework for Board committees as approved by the Board Meeting No. 1/2014 dated 7 March 2014, details of which are as shown below:


Chairman of each Board committee - 15,000

Member of each Board committee - 15,000

Remuneration of Nomination and Remuneration Committee in 2014

Name - Surname PositionMonthly Salary and Attendance Fee

(THB)2557

1. Mr. Issarachai Decharit Chairman 30,000

2. Mr. Prasan Limpipatanakul Member 30,000

3. Mrs. Eng Passakornnatee Member -Remark: In 2014, the Nomination and Remuneration Committee held 2 meetings.

Remuneration of Executive

The remunerations in the form of monthly salary, bonus and other compensations paid by the Company to its executives in 2013 – 2014 are as follows:

Remuneration of the Company’s Executive in 2013 – 2014

Type2013 2014

No. of Executive

Amount (THB)

No. of Executive

Amount (THB)

Salary 5 20,988,000 6 22,767,040

Bonus 5 2,247,000 6 6,041,760

Total 23,235,000 28,808,800Remark: In 2013, Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee waived their right to the remunerations. Thus, the figures shown above represent the bonus of 3 executives.

80

Other Remuneration

In 2013 – 2014, the provident fund contributions paid by the Company for its executives are as detailed below:

Type2013 2014

No. of Executives

Amount(THB)

No. of Executives

Amount(THB)

Contribution to provident fund 5 942,600 6 1,032,352

Total 942,600 1,032,352

PersonnelRecognizing that personnel is a valuable resource, the Company attaches importance to human resources management and continuous people development to ensure that its personnel is highly capable and knowledgeable as human resources is a key driver of the Company’s competitiveness.

Manpower

As of 31 December of 2013 - 2014, the numbers of the Company’s employees were 211 and 275, respectively.

Manpower in 2013 – 2014 by Department

DepartmentManpower

31 Dec 13 31 Dec 14

1. Office of CEO 14 12

2. Accounting & Finance 12 12

3. Beverage Marketing 19 30

4. Production Plant 125 181

5. Design 6 6

6. Marketing Communications 3 3

7. Online Marketing 5 5

8. Human Resources 8 9

9. Business Development 3 2

10. Procurement 13 11

11. Legal 2 2

12. Internal Audit 1 2

Total 211 275

ANNUAL REPORT 2014

81

Significant Change in Number of Employee in Previous 3 Years

In 2014, the Company increased its manpower in certain departments such as production plants and beverage marketing to support our production capacity expansion.

Remuneration of Employee

The Company offered to its employees the remuneration in the form of salary, bonus, provident fund contribution, group insurance, overtime pay and other types of compensation. Remunerations paid to employees (exclusive of executives) in 2013 – 2014 are as detailed below:

Remuneration (THB) 2013 2014

Salary 67,092,573 84,707,846

Bonus 15,214,014 19,773,120

Other remunerations* 48,419,902 50,658,917

Total 130,726,489 155,139,883

Remark: *Other remunerations refer to the contributions to provident fund and social security fund, vehicle allowance, telephone allowance, labor costs, overtime pay, employee welfare and benefits, and share-based payment etc.

Major Labor Dispute in Previous 3 YearsThe Company has no labor dispute with its executives or employees with respect to right infringement or employment contract violation.

People Development PolicyThe Company is fully aware of the importance of people development to the enhancement of organizational effectiveness and efficiency, including competitive advantages and sustainable growth and achievements. Therefore, the Company has consistently encouraged its employees to sharpen their skills, expand their knowledge and internalize the deep sense of social responsibility through the following:

• To promote the career advancement of our employees, the Company has developed career growth roadmap to communicate to employees their promotion and job transfer opportunities, including the skills and competencies required for such positions. Also, criteria for promotion/job transfer have been clearly defined.

• Our training and people development programs primarily evolve around training plans which have been customized to the development needs in terms of competencies, attitude and functional skills. Development and training have been conducted through in-house and external programs and regularly offered to employees at all levels across the organization to ensure that our employees are equipped with knowledge and competencies required for their effective performance.

82

Corporate Governance

Corporate Governance PolicyIchitan Group Public Company Limited is committed to the principles of corporate governance and the continuous enhancement of its corporate governance system to achieve business excellence and operational effectiveness for the best benefits of our shareholders and stakeholders. The Company has consistently adhered to the principles of integrity, business ethics, transparency and disclosure and translated such principles into its Corporate Governance Policy which is based on the SET’s guidelines. The policy is enforced on and complied with by all directors, executives and employees of the Company.

Corporate Governance GoalThe Board has attached importance to the corporate governance principles and aimed to ensure the Company’s proper compliance with the laws and applicable rules, practices and requirements to achieve transparency and fairness in all dimension of the Company’s business operations. The Board has also given priority to the Company audit, internal control, risk management and disclosure which to foster continuous and sustainable growth of the Company and generate the maximum value and return to all shareholders and stakeholders within the scope permissible by the law and business codes of conducts.

In addition, the Company has actively promoted the awareness of the corporate governance principles and policy and the adherence thereto through the Corporate Governance Handbook and the Code of Conduct of the Company which are available on the Company’s website in Thai and English to facilitate easy access thereto by all employees, shareholders, investors, stakeholders and relevant parties.

The corporate governance practices of the Company can be divided into 5 parts as follows:

Part 1 Rights of Shareholders

Part 2 Equitable Treatment of Shareholders

Part 3 Roles of Stakeholders

Part 4 Disclosure and Transparency

Part 5 Responsibilities of the Board

Part 1 Rights of ShareholdersThe Company recognizes the importance and rights of shareholders and encourages shareholders to exercise their rights. Policies and guidelines of the Company in respect of the promotion of shareholders’ right are as detailed below:

ANNUAL REPORT 2014

83

1. The Company provides shareholders with information in respect of the date, time, venue, agenda items and all supporting documents in advance of shareholders’ meetings. Shareholders are notified of meeting and voting procedures which are published on the Company’s website to allow them sufficient time to study the meeting documents before the documents containing such information are delivered to them.

2. The Company does not perform any act that could hinder shareholders from studying the Company’s information.

3. The Board facilitates shareholder participation and voting at meetings.

4. The chairman of the meeting allocates adequate time for discussion and encourages shareholders to express their opinions and ask questions related to the Company. Shareholders are offered opportunities to submit their questions to the Company prior to the meeting date.

5. All directors attend shareholders’ meetings and shareholders can raise questions directly to the chairpersons of the committees responsible for any specific issues.

Investor Relations Division of the Company is in charge of releasing the Company’s information to shareholders, investors, analysts, the press and the general public and ensuring that the disclosures are accurate, complete, timely, transparent and fair to all audiences. Information disclosed includes, for example, the Company’s information, financial statements, annual report, notice of shareholders’ meeting, SET filings and news about the Company’s securities. Such information is available in Thai and English under the section of “Investor Relations” on the Company’s website at www.ichitangroup.com. Shareholders may directly contact Investor Relations Division via e-mail at [email protected] or www.ichitangroup.com.

Part 2 Equitable Treatment of ShareholdersThe Company offers equal opportunity to all shareholders and has a policy on equitable treatment of shareholders as follows:

1. The Board facilitates the minority shareholders’ proposal of meeting agenda in advance of the shareholders’ meeting date.

2. The Board has set clear criteria for deciding whether agenda items proposed by minority shareholders should be included on the meeting agenda.

3. Unless necessary, the Board refrains from adding extra items to the meeting agenda without advance notification thereof, especially important matters which require substantial time for studying by shareholders,.

4. The Board establishes procedures for the nomination of directors by minority shareholders.

5. The Board encourages shareholders to use proxy form on which they can specifically indicate their votes and to appoint at least 1 independent director as their proxy.

84

6. The Board encourages shareholders to use voting ballots for important agenda items to promote transparency and verification.

7. The Board allows shareholders to appoint directors on an individual basis.

8. The Board establishes guidelines for information retention and protection and the Insider Trading Policy in writing for enterprise-wide compliance. All directors and executives are required to report their shareholdings to the Board in accordance with applicable laws.

In 2014, the Company held 1 shareholders’ meeting, i.e. the annual general meeting of shareholders (AGM) no. 1/2014 on 31 March 2014. In this regard, the notice of the AGM containing the agenda, the Board’s recommendations, the minutes of the previous meeting, accompanying documents, proxy form and proxy appointment instruction had been submitted at least 7 days prior to the meeting to all shareholders whose name appeared on the register as of the closing date. The notice had been published in at least one daily newspaper for at least 3 consecutive days. Shareholders were offered the opportunity to appoint independent directors or any other persons as their proxy.

In the 2014 AGM, all of the 9 directors of the Company attended the meeting and the chairman of the Board presided over as the chairman of the AGM. Details regarding the quorum, voting and vote counting procedures, and instruction on use of ballots were notified to the AGM. The voting results were transparently disclosed. Shareholders were allowed sufficient opportunities and time to raise questions and offer opinions, and received satisfactory and clear responses and clarification from directors and executives. The meeting proceeded in full compliance with the laws and registration could be made before the meeting began until it was adjourned. The minutes of the meeting were accurately and completely recorded and systematically retained for the ease of reference and verification.

Part 3 Roles of StakeholdersThe Company is committed to equitable treatment of external and internal stakeholders and justly protect the interest of all stakeholders in accordance with the laws and its policy on stakeholder treatment. The Audit Committee of the Company is an independent entity in charge of oversight the Company’s compliance thereof.

The Company’s guidelines on the rights of stakeholders are as follows:

• Customers: We aim to deliver the maximum value and satisfaction to all groups of customers by offering the best and quality products.

• Shareholders: The Company strives to continuously achieve solid growth and strong business momentum through efficient and transparent business operations in order to generate suitable and fair returns for shareholders and increase the Company’s value. The Company has implemented effective internal control, internal audit and risk management systems and equitably treated all shareholders. Disclosures have been made in a timely, complete and accurate manner.

• Employees: The Company has continuously developed its human resources and offered career advancement opportunities to employees. All employees receive equitable treatment and suitable and fair remuneration which is commensurate with their knowledge, abilities and performance.

ANNUAL REPORT 2014

85

• Suppliers and creditors: The Company aims to establish trust, cooperation and positive relationship with its suppliers and creditors though its compliance with agreed terms and conditions and legal and regulatory requirements for the mutual benefits of all parties concerned.

• Partners and competitors: The Company treats all partners and competitors with fairness and adheres to the laws and rules governing confidentiality as well as fair competition best practices. The Company does not use dishonest or unethical means to gain information about its partners and competitors

• Community, society and environment: The Company is responsible for the society and the environment and sensitive to issues which might affect the community, society and environment. The Company cares about environmental protection, operates in accordance with business ethics and supports activities that contribute to the society. Additionally, the Company fosters the environmental awareness and a sense of social responsibility among its employees.

The Company will continue to comply with applicable legal and regulatory requirements in order to promote and protect the stakeholders’ rights.

Part 4 Disclosure and TransparencyThe Company fully and accurately releases its financial and non-financial information in accordance with applicable disclosure rules of the SEC and the SET as follows:

1. The Company discloses information in accordance with applicable requirements through the SET, annual filing (Form 56-1) and annual report. Information about the Company in Thai and English is also available through the Company’s website.

2. The Board discloses the approved Corporate Governance Policy in brief and the results of the implementation thereof through the Company’s annual report and website.

3. The Company is responsible for the consolidated financial statements of the Company and its subsidiaries including financial information disclosed in the annual report.

4. The Company publishes the scope of roles and responsibilities of the Board and committees, the number of meetings held, the meeting attendance report, and opinions on their performance in its annual filing form (Form 56-1).

5. The Company discloses in the annual filing form (Form 56-1) the remuneration of directors and executives which are commensurate with their scope of duties and responsibilities.

Investor Relations

Investor Relations Division of the Company is in charge of releasing the Company’s information to shareholders, investors, analysts, the press and the general public and ensuring that such disclosure is fair and equitable to all parties.

Ichitan has attached importance to the disclosure of the Company’s information through IR activities in which the management team also participates to promote correct understanding about the Company’s operations and management direction as well as positive relationship and exchange of beneficial opinions and ideas.

86

The Company’s IR activities in 2014 include 3 analyst meetings, regular company visit programs and correspondence with investors and the press via e-mail and telephone.

Information about the Company, its performance, financial statements, news, securities information, and annual report etc. is regularly updated and available from the Company’s website under the section of Investor Relations. Investors can directly contact Investor Relations via telephone at 02-716-5555 or via e-mail at [email protected].

Part 5 Responsibilities of the Board1. Board Composition

• The Board is comprised of 9 directors, of which 6 are executive directors and 3 are non-executive directors, and their term of position is 3 year. The 3 non-executive directors qualify as independent directors in accordance with the SEC’s qualification criteria. The number of the Company’s independent directors meets the SEC’s requirements which stipulate that, among other, listed companies must have independent directors at least one-third of their total directors. The Company’s directors possess expertise and knowledge in different fields such as business administration, accounting and finance which are considered beneficial and relevant to the Company’s business.

• The Company has 4 board committees, i.e. the Audit Committee, the Executive Committee, the Risk Management Committee and the Nomination and Remuneration Committee.

• The Chairman of the Board also serves as the Chief Executive Officer of the Company. In this regard, the Company has clearly defined the scope of authority, duty and responsibility to promote the checks and balances.

• The Company has delegated to the Company Secretary the duty to provide advice and consultation regarding legal and regulatory requirements applicable to the Board as well as to ensure that the Board’s resolutions are duly implemented.

2. Board Committees

• The Board decentralizes its authority to promote efficient and transparent management. The Audit Committee is delegated by the Board to review compliance of the Company with corporate governance principles whereas the Risk Management Committee is responsible for review and screen specific matters to support decision-making by CEO.

• The Chairman of the Audit Committee must be an independent director to promote the transparency and independence.

3. Roles and Responsibilities of the Board

The Board is comprised of members who possess suitable qualifications in terms of their leadership, knowledge, skills and expertise in various fields. Roles and responsibilities of the Board are as follows:

• To determine the vision, mission, strategies, and annual business and budget plans of the Company, including to meet regularly to oversee and monitor the management in implementing the business plan efficiently and effectively.

ANNUAL REPORT 2014

87

• To formulate written policies pertaining to good corporate governance, professional and business ethics, codes of conduct for directors, executives and employees for internal implementation.

• To set guidelines and policies governing transactions with potential conflicts of interest in order to protect the interest of the Company and its shareholders. In this regard, the Board and the Audit committee have established relevant operating and disclosure procedures.

• To set financial policies which contribute to effective controls and compliance.

• To formulate enterprise-wide Risk Management Policy and regularly inform the management of relevant updates.

Corporate Governance Policy

The Company has in place the written Corporate Governance Policy which has been approved by the Board. The policy has been regularly reviewed and consistently implemented across the organization. Following the SET-listing of Ichitan securities, the Company has additionally complied with all rules and regulations stipulated by the SEC and the SET. The corporate governance report is part of the annual report and annual filing (Form 56-1).

Business Code of Conduct

The Company has determined codes of conduct for directors, executives and employees to promote integrity and fairness, including proper treatment of all stakeholders, the public and the society. The codes of conduct have been communicated across the organization and conformity thereto has been continuously monitored.

Conflicts of Interest

The Company’s policy on conflicts of interest is based on the principle that all transactions shall be only for the Company’s best interest and acts potentially causing conflicts of interest shall be avoided. Parties related to or involving in such transactions shall report to the Company their relationship or connection with respect to such transactions and shall not participate in the consideration or approval process of such transactions.

Connected transactions and conflicts of interest shall be carefully reviewed by the Audit Committee in accordance with the requirements and rules stipulated by the SEC and the SET before proposal there of to the Board as well as disclosed in the annual report and the annual filing (Form 56-1).

Internal Control System

The Company has recognized the importance of the internal control system at operational and managerial levels as a key contributor to business excellence. Therefore, the Company has clearly determined the authority and duties of operating officers and executives in writing to support effective asset utilization and control, segregation of duties of operating officers, supervisors and controllers. Also, the Audit Committee is tasked with the review of the Company’s internal control and internal audit systems to ensure appropriateness and effectiveness of the systems. Independent experts have been engaged in the monitoring and review of our internal control system and report the results to the Audit Committee to ensure that core activities of the Company are in line with relevant guidelines and effective.

88

Risk Management

The Company has reviewed the adequacy of its internal control system in order to identify areas for improvement and further enhance the effectiveness of its operations.

Reporting

The Audit Committee is in charge of reviewing financial statements which had been proposed and reviewed by the Accounting Department and the auditors on a quarterly basis. The Board is responsible for the Company’s financial statements and financial information (report on the Board of Directors’ responsibility for financial reporting) disclosed in the annual report. The Company’s financial statements have been prepared in accordance with the accounting standards and certified/reviewed by the Company’s auditors. Important information, financial information and non-financial information are regularly and completely disclosed and based on actual facts.

Succession Plan

The Board recognizes that the efficiency, effectiveness and continuity of business are vital to the sustainable growth of the organization. Therefore, in 2014 the Company first initiated the succession planning to the Company has successors for its key positions.

4. Board Meetings• The Company regularly holds Board meetings at least once every 3 months and special meetings

of the Board will be held as and when necessary. All directors attach importance to the Board meetings and attended every meeting. The invitation to Board meetings together with meeting agenda are submitted to directors at least 7 days prior to each meeting to allow directors sufficient time to study the materials.

• Directors can freely and openly express their opinions and ideas at Board meetings and the minutes of the meetings are duly recorded in writing. Meeting minutes which have been adopted by the Board are properly retained and available for verification by directors and related parties. Senior executives have been invited to attend Board meetings to provide information and opinions on matters discussed by the Board.

• The Chairman of the Board is responsible for determining the meeting agenda and all directors are vested with the authority to independently propose agenda items as they deem appropriate.

• Senior executives also participate in Board meetings.

5. RemunerationThe Company has appointed the Nomination and Remuneration Committee which is responsible for offering to the Board its opinions on the remuneration of each committee which shall be in accordance with the Director Remuneration Policy of the Company. Remuneration of directors has been transparently and clearly determined based on the Company’s operating results and are commensurate with the scope of duties and responsibilities of each director. The Company aims to offer appropriate remuneration scheme to effectively retain competent directors for the Company’s best interest. The director remuneration is subject to approval from the annual general meeting of shareholders.

Remuneration of directors and executives is disclosed based on the template of the SEC.

6. Director and Executive DevelopmentThe Board encourages all directors and executives to regularly attend training courses and seminars to enhance their knowledge in all related fields, develop their job-related competencies and strengthen their corporate governance repertoire.

ANNUAL REPORT 2014

89

7. Self-Evaluation of the Board

The Board has a policy to adopt self-assessment for the performance of the Board and individual directors.

Nomination of Director and Executive In the process of director nomination, the Nomination and Remuneration Committee takes into consideration the qualifications of candidates in terms of their education, knowledge, abilities work experience as well as the applicable legal and regulatory requirements. The nominations are proposed to the Board and/or the shareholders’ meeting for consideration and approval in accordance with the Company’s policy.

DirectorThe nomination of directors shall be in accordance with the Company’s Articles of Association and the nominated candidates shall possess all qualifications required under the Public Limited Companies Act B.E. 2535, the Securities and Exchange Act and the notifications of the SEC, the Market Supervisory Board and/or other relevant regulations. According to the Company’s Articles of Association, the Board shall be comprised of at least 5 members and not less than half of the total Board members shall have domicile in Thailand. The Board shall elect the Chairman of the Board and, where appropriate, the Vice Chairman of the Board. Directors shall be elected at the shareholders’ meeting according to the majority and the following procedures:

1. Each share shall represent one vote.

2. ach shareholder shall cast all the votes he/she has to elect one or several directors and may not split the votes for multiple candidates.

3. The candidates who receive the highest votes will assume directorship according to vacant seats applicable to a particular election. In case of vote tie, the Chairman shall have the casting vote.

At each annual general meeting of shareholders, one-third of the directors, or the closet thereof if the number cannot be evenly divided, shall retire by rotation. Retiring directors may be re-elected. It shall be deemed that directors vacate their seat upon their death, resignation, disqualification, or possession of prohibited characteristics under the Public Limited Companies Act, or removal according to the resolution of the shareholders’ meeting or the court’s order. As such, the Board may appoint persons who possess suitable qualifications and no prohibited characteristics under the Public Limited Companies Act to fill the vacated seat in the subsequent Board meeting, unless the remaining term of such directors is less than 2 months. The office terms of a new director appointed in replacement for another director shall be equal to the remaining office term of the directors whom he/she replaces and such director appointment by the Board shall require a three-fourths majority of the remaining directors.

Directors are prohibited by the Company from operating a business of the same nature as and in competition with the Company, or to enter to be a partner in an ordinary partnership or a partner of limited liability in a limited partnership or a director of a private company or other company which operates a business of the same nature as and in competition with the Company, whether for their own or others’ benefit, unless the meeting of shareholders had been notified prior to their appointment as director of the Company. Directors shall notify the Company without delay of their direct or indirect interest in any contracts of the Company or changes to their holding of shares or debentures issued by the Company or its affiliates.

90

Independent DirectorThe Board shall select independent directors in accordance with the qualification criteria under the Public Limited Companies Act B.E. 2535, the Securities and Exchange Act, the notifications of the SEC and the Market Supervisory Board, and any other applicable notifications and/or rules and regulations. The Company shall have at least 3 independent directors or one-third of its directors, whichever is higher.

Qualifications of Independent Director

Independent directors shall not have business with the Company or involve in the management of the Company or have any interest related to the Company in a way that may affect the independence of their decisions. Independent directors must possess the following qualifications:

1. An independent director and his/her related parties shall altogether hold not more than 1% of the total shares with voting right of the Company, its parent company, subsidiaries, affiliates, major shareholders or persons having controlling power over the Company.

2. An independent director must not be and have been executive director, employee, salaried consultant or the Company, its parent company, subsidiaries, affiliates, sister companies, major shareholders or persons having controlling power over the Company unless he/she has ended such status for 2 years or longer from the date of filing permission with the SEC. The above prohibited characteristics exclude the independent director’s status as a civil servant or consultant of a government entity which is the major shareholder or person having controlling power over the Company.

3. An independent director must not have blood relationship or relationship through legal registration as a father, mother, spouse, sibling, and child, including as a spouse of a child, of any director, executive, major shareholder, person with controlling power, or person nominated as director, executive or person with controlling power of the Company or its subsidiaries.

4. An independent director must not have or have had any business relationship with the Company, its subsidiaries, affiliates, major shareholder, or person with controlling power of the Company in a manner that may hinder his/her independent judgment. An independent director must not have or have had been a significant shareholder or a person with controlling power of an entity which has business relationship with the Company, its parent company, subsidiary, affiliate, major shareholder, or person with controlling power, unless he/she has ended such status for 2 years or longer from the date of filing permission with the SEC.

Business relationship stated above refers to any commercial transactions in the normal course of business, real property leasing, transactions related to assets or services, lending or borrowing, guarantee, collateralization or any other similar acts which cause the Company or its counterparty to have debt obligations to the other party in the amount of 3% of the Company’s net tangible assets or Baht 20 million and above, whichever is lower. The calculation of such debt obligations shall be according to the calculation method for connected transactions under the notifications of the Capital Market Supervisory Board on the criteria for connected transactions mutatis mutandis and shall also cover the period of 1 year prior to such business relationship.

5. An independent director must not be or have been an auditor of the Company or its parent company, subsidiary, affiliate, major shareholder or person with controlling power of the Company; or a significant shareholder or a person with controlling power or a partner of an auditing firm which provides auditing service for has the Company, its parent company, subsidiary, affiliate, major shareholder, or person

ANNUAL REPORT 2014

91

with controlling power, unless he/she has ended such status for 2 years or longer from the date of filing permission with the SEC.

6. An independent director must not be or have been a professional service provider, including legal or financial advisor who obtains fee of more than Baht 2 million per year from the Company, its parent company, subsidiary, affiliate, major shareholder, person with controlling power of the Company; or significant shareholder or person with controlling power or a partner of such professional service provider, unless he/she has ended such status for 2 years or longer from the date of filing permission with the SEC.

7. An independent director shall not be a representative of the Company’s directors, major shareholder or shareholder being related party of the Company’s major shareholder.

8. An independent director shall not operate business of the same nature as and in competition with the Company or its subsidiary; shall not be significant partner of partnership, or executive director, employee, officer or salaried consultant or holder of more than 1% of the shares with voting rights of business of the same nature as and in competition with the Company or its subsidiary.

9. An independent director shall not possess any other characteristics which can obstruct his/her independent judgment of the Company’s business operations.

An independent director may be assigned by the Board to make collective decisions related to business operations of the Company, its parent company, subsidiary, affiliate, sister company, major shareholder or person with controlling power of the Company.

If a person appointed as an independent director has or had business relationship or is or was a professional service provider which resulted in the transactions worth more than the amount specified in 4) or 6) above, the Board may grant relaxation for such appointment provided that it does not affect his/her independence and the following information has been disclosed in the notice of shareholders’ meeting under the agenda item of independent director appointment:

1. Nature of business relationship or professional service which cause the deviation from the qualification requirements.

2. Rationale and necessity for the appointment or retention of such person as the Company’s independent director.

3. The Board’s opinion on the nomination of such person as an independent director.

ExecutiveThe nomination and selection policies and criteria for the position of CEO are determined by the Board whereas the same for senior executive vice president and executive at vice president level and above are determined by CEO.

Control over Use of Insider InformationTo promote the Company’s good governance system, the Board has approved the Insider Information Policy as follows:

92

1. Directors, executives, employees and staff of the Company shall protect confidential information and/or inside information of the Company.

2. Directors, executives, employees and staff of the Company shall not disclose confidential information and/or insider information of the Company for their personal gain or interest of others either directly or indirectly, regardless of whether they receive compensation for such disclosure.

3. Directors, executives, employees and staff of the Company, including their spouse and dependent children shall not use insider information of the Company for the benefit of securities trading, securities transfer transactions or legal acts which may cause damage the Company either directly or indirectly. Violation of this rule is considered a grave offence.

4. The Company has established guidelines for retention of insider information and prevention against use of insider information to prohibit directors, executives at vice president level and above, and employees having access to insider information, including their related parties from trading the Company’s securities during the period of 1 month prior to the release of quarterly and annual financial statements and 48 hours following the release of important information.

5. Directors and executives at vice president level and above shall report to the Company all of their trading transactions of the Company’s securities.

Policy and Guideline on Use of Insider Information by ExecutiveThe Company has established the Insider Information Policy to prevent and prohibit the use of insider information, especially the Company’s non-public financial information, by limiting the number of employees having access to such information. The Company has also communicated to all executives their duties in this respect which include the obligation to report to the Company the holding of the Company’s securities by themselves, including their spouse and dependent children, and applicable punitive measures in accordance with the Securities and Exchange Act B.E. 2535 and its amendments. In addition, executives of the Company are required to report changes to their holding to the Company’s securities to the SEC in accordance with Section 59 of the Securities and Exchange Act as well as to strictly comply with Section 24 of the Securities and Exchange Act.

Audit Fee• Audit Fee

The Company paid the audit fee worth Baht 1,740,000 to KPMG Phoomchai Audit Limited in 2014.

• Out-of-Pocket Expense

The out-of-pocket expense amounted to Baht 80,000.

Compliance with Corporate Governance PrincipleThe Board, executives and employees of Ichitan Group Public Company Limited have duly complied with the corporate governance principle and continuously monitored compliance thereof. In 2014, no non-compliance was identified.

ANNUAL REPORT 2014

93

Corporate Social Responsibility

Ichitan Group Public Company Limited (“the Company”) strives to maximize the satisfaction of our customers, buyers and end-consumers. In addition to offering products of premium quality and fair prices, the Company aspires to positively contribute to the society and the environment and strictly refrains from acts which appear to be the infringement of the consumer rights. To attain the aforesaid goals, the Company has strictly adheres to our Corporate Social Responsibility Policy which encompasses the following pillars:

Fairness and Integrity

Fair CompetitionThe Company has operated on the principle of fairness and complied with competition-related laws and regulations. The culture of integrity and fairness has been embedded in our corporate culture and the anti-unfair competition measures have been integrated with the Company’s rules and regulations which are enforced enterprise-wide to promote transparency and disclosure. Our corporate social responsibility (CSR) extends to cover responsible political participation, compliance with the laws, fair competition, promotion of CSR awareness among business units and honoring commitments agreed with our suppliers and creditors. These topics have been detailed in the Company’s code of business conduct which ultimately aims to foster the fairness and integrity in the relationship between the Company and its customers and partners, which include suppliers, farmers and the local community, which are the foundation for mutual trust and sustainable future of all parties concerned.

To promote fairness, integrity and transparency in our business practices, the Company has developed our internal guidelines which cover the following:

• Clearly indicate mutually agreed terms and conditions in purchase and sale agreements and strictly comply with such terms and conditions. Where issues which might cause the Company to be unable to comply with the agreed terms and conditions arise, customers must be notified and consulted immediately to solve such issues.

• Provide customers with correct and sufficient product information in a timely manner.

• Deliver quality products that meet the promises given to customers at fair price without price gouging.

Promotion of CSR Network Among Our Business Partners • Scrutinize the relationship between employees at all levels with suppliers, subcontractors and

contractors of the Company regularly to prevent unfair or inequitable treatment.

• Promote fair employment practices among the Company’s suppliers, subcontractors and contractors through communication, cooperation and examination.

• Incorporate CSR practices, with particular attention to the society and the environment, in our procurement policy and procedures.

94

• Encourage alliances/business partners to adopt similar practices without instigating unfair competition.

• Encourage business partners to undertake CSR activities and engage them in our CSR activities.

• Promote CSR activities of suppliers and continuously engage them in our CSR activities directly as volunteers in projects and indirectly through in-cash or in-kind donations.

Respect for Property Rights Ichitan Group Public Company Limited has advocated for and demonstrated the respect for property right, intellectual property right, copyright, patent and moral right. It is the Company’s policy to comply with laws governing the protection of intellectual property right and copyright. We are well aware that intellectual property is one of the most valuable assets and vital for the Company’s ability to gain competitive edge. Brand identity consists of the Company’s name, logo, copyright, patent, trademark, service mark, trade secret, work process, innovation, and other legal rights. The Company must protect the aforesaid properties of itself and mutually respect the same of others in all aspects of its business operations, including the use of computers, the Internet and information.

To ensure our proper compliance with the laws, rules and contractual obligations related to intellectual property right, patent, copyright, trade secret and proprietary information, the Company has established the following guidelines:

• The Company shall not infringe or abuse intellectual property rights.

• It is the duty of employees at all levels of the Company to strictly protect the confidentiality of trade secrets, secret formulas, production processes or confidential business practices and prevent the leakage thereof.

• Employees at all levels of the Company shall demonstrate due respect for intellectual property rights of others and shall not use contents that are protected by intellectual property rights, in whole or in part, without prior permission or compensation payment to the owners.

• Works created in the course of employment shall be regarded the Company’s intellectual properties.

• Upon employment termination, intellectual properties in all forms, including the works of invention, shall be handed over and returned to the Company.

• The Company shall regularly check computers and software programs used.

• Employees shall use only licensed software programs which are permitted by the Company on the Company’s computers in order to prevent the infringement of intellectual property rights.

• Unauthorized downloads are prohibited.

• The Company discourages the use of proprietary works or information of external parties. If such works or information are to be used, applicable procedures shall be undertaken to ensure compliance with and respect for intellectual property rights and copyrights of others.

ANNUAL REPORT 2014

95

Responsible Political ParticipationThe Company has adopted non-partisan approach and does not take any political side nor directly or indirectly use the Company’s capital or resources to make political contribution to any political party or politician in exchange for preferential treatment. In addition, our executives and employees are prohibited from the acts of coercion, manipulation, intimidation and extortion. Our Political Contribution Policy addresses the following aspects:

• The Company encourages employees at all levels to exercise their civil rights and political rights as decent individuals within the scope permissible by the Constitution and the laws. Prohibitions are imposed against abusive use of authority, position, the Company’s names or logos by employees at all level to influence others to provide financial contributions or supports in other forms to politicians or political parties. The Company refrains from providing direct or indirect financial contributions to any political party or politician for their own benefit.

• The Company pledges to remain its political neutrality, non-involvement and non-participation in any political activity and to refrain from expressing opinions which may lead to misinterpretation that the Company is involved with or supports any political party or politician or political affiliation as such may cause division among Thais and the Company’s employees.

• The Company’s capital and resources shall not be directly or indirectly used for the benefits of any political party or politicians or political affiliation in exchange for preferential treatment or undue enrichment.

• The Company shall not be involved in any political canvassing or campaign of any political party or politician.

• The Company respects the rule of democracy and encourage its employees to exercise their voting rights under the Constitution.

Anti-CorruptionIchitan Group Public Company Limited (“the Company”) is committed to adhering the principle of business integrity and demonstrating responsibility towards the society and all stakeholders in accordance with the good corporate governance philosophy, its business code of conduct and stakeholder treatment policies and guidelines. In 2014, the Company expressed its intent and commitment to fight corruption by stipulating anti-corruption framework and policy which was approved by the Board Meeting No. 3/2014 on 13 August 2014. The Anti-Corruption Policy is enforced on the Company’s directors, executives and employees at all levels and entails the following:

Definitions under the Anti-Corruption Policy

Corruption means bribery in all forms such as an offer, promise, guarantee, solicitation or acceptance of money, assets, or unethical benefits from or to the government officers, government organizations, private organizations any persons either directly or indirectly in exchange for patronage or omission of duty for any undue business gains and benefits which are not allowed by the laws, regulations, rules, local traditions or customary business practices.

96

Fraud means solicitation of undue and unlawful enrichment through the abuse of function by directors, executives, the Company, customers, trading partners or contractual parties which shall include but shall not be limited to falsification of financial evidences, use of the Company’s capital and resources for personal gains, exploitation, embezzlement, defraud or conflicts of interest.

Corrupt payment or fraudulent benefit distribution shall include the distribution of money, assets or benefits directly by the Company itself or indirectly through customers/trading partners or third parties.

Anti-Corruption Program

The Company’s anti-corruption program includes the following policies:

• Anti-Corruption Policy

• Political Contribution Policy

• Policy on Receiving Gifts, Assets or Benefits

• Whistleblowing and Whistleblower Protection Policy

Anti-Corruption Policy

Ichitan Group Public Company Limited (“the Company”) recognizes the importance of the good corporate governance practice and consistently adheres to the principles of business integrity, honesty, transparency, fairness, accountability and prudence in accordance with applicable laws, rules, regulation and standards.

The Company is highly committed to anti-corruption and does not tolerate corruption in any form. The Anti-Corruption Policy has been established and implemented both within the organization and with our business partners to promote transparency and integrity in every step of our process and to avoid acts which may cause inappropriate behaviors or contravention against the principle of good governance. Anti-bribery measures and corresponding disciplinary punishments have been also been defined.

To provide a clear framework for handling issues exposed to high level of corruption risk, the Company’s directors, executives and employees at all levels shall proceed with extra care and prudence in relation to the following:

• Gift, hospitality and expense: Practices related to giving and receiving gifts and hospitality shall comply with the Company’s Code of Conduct.

• Donation and financial contribution: Donations and financial contributions made or received must be transparent and lawful and shall in no way be used as a bribery tool.

• Business relationship with government sector: Bribery in all forms is strictly prohibited and relationship with government sector must be transparent, honest and lawful.

Non-compliance with the aforesaid guidelines by directors, executives and employees of the Company shall result in disciplinary actions against the violators. Disciplinary punishments shall be decided based on facts and circumstantial evidence. According to the Company’s policy, no employee shall suffer demotion, punishment or negative consequence from their anti-corruption actions even if such actions may result in the Company’s loss of business opportunity.

ANNUAL REPORT 2014

97

Political Contribution Policy

Political support refers to contributions in cash and in kind and/or participation or promotion of employees’ participation in political activities in the name of the Company in exchange for business advantages. This shall exclude the participation of employees as individuals in political activities according to their civil liberties.

The Company has adopted non-partisan approach and does not take any political side nor directly or indirectly use Company’s capital or resources to make political contribution, as defined by the above paragraph, to any political party or politician in exchange for preferential treatment.

The Company’s Political Contribution Policy:

• The Company encourages employees at all levels to exercise their civil rights and political rights as decent individuals within the scope permissible by the Constitution and the laws. Prohibitions are imposed against abusive use of authority, position, the Company’s names or logos by employees at all level to influence others to provide financial contributions or supports in other forms to politicians or political parties. The Company refrains from providing direct or indirect financial contributions to any political party or politician for their own benefit.

• The Company pledges to remain its political neutrality, non-involvement and non-participation in any political activity and to refrain from expressing opinions which may lead to misinterpretation that the Company is involved with or supports any political party or politician or political affiliation as such may cause division among Thais and the Company’s employees.

• The Company’s capital and resources shall not be directly or indirectly used for the benefits of any political party or politicians or political affiliation in exchange for preferential treatment or undue enrichment.

• The Company shall not be involved in any political canvassing or campaign of any political party or politician.

• The Company respects the rule of democracy and encourage its employees to exercise their voting rights under the Constitution.

Policy on Receiving Gifts, Assets or Benefits

Ichitan Group Public Company Limited stipulates that giving or receiving gifts, assets or benefits must be within a reasonable scope and shall in no way have influence on the Company’s judgment.

On receiving money or benefit: Directors, executives and employees shall not personally accept money or benefit given by customers or trading partners of the Company or any other persons because of their positions in the Company and shall not demonstrate acts or behaviors that might be suspected as bribery or fraud.

Directors, executives and employees shall not lend or borrow or solicit funds or in-kind contribution from customers or business partners of the Company, except where they borrow funds from banks or financial institutions as customers of such banks or financial institutions themselves.

On receiving and giving gifts and entertainment: Directors, executives and employees shall refrain from receiving pecuniary and non-pecuniary gifts from trading partners of the Company or other parties involving with the Company unless such gifting is customary for special occasions or festivals. Gifts and

98

entertainments received or given shall in no way have influence on the recipients’ business judgment and shall be reported to supervisors according to the line of command. Gifts received should not be excessive in value and should not be cash or cash-equivalent. Giving and receiving of gifts are allowed if they are transparently and publicly made and disclosed.

Directors, executives and employees are allowed to receive business entertainments for business benefits of the Company and shall avoid extravagant or lavish entertainments from parties involved in the Company business or potential business partners of the Company.

• On incentives and rewards: It is the Company’s policy not to offer incentives, rewards or privileges in any form to its customers, trading partners or third parties in exchange for business deals, except for those being customary business entertainments, trade discounts or promotional activities of the Company.

Whistleblowing and Whistleblower Protection Policy

Ichitan Group Public Company Limited has made available whistleblowing channels as detailed below:

1. Objectives

2. Whistleblowing scope

3. Whistleblowers

4. Whistleblower protection

5. Whistleblowing channels

6. Related parties

7. Process

7.5 Case registration and escalation

7.5 Investigation and instruction

7.5 Progress reporting to whistleblower and rectification

7.5 Malicious whistleblowing and use of wrong whistleblowing channels

7.5 Responsibilities of case coordinators, case owners and upper level managers

1. Objective

Ichitan Group Public Company Limited encourages its executives, employees and staff to adhere to the principles of transparency, integrity and disclosure, good corporate governance practices, and the Company’s code of conduct. Acts which violate or appear to violate the aforesaid principles should be reported in good faith to the Company in order to solve such issues and promote integrity, transparency and fairness. According to the Securities and Exchange Act, whistleblowers who report cases in good faith to regulators shall be protected and the same is applied by the Company.

The Company has established the Whistleblowing and Whistleblower Protection Policy to provide the management and Human Resources team with the framework for monitoring and supervising behaviors, conducts and acts employees and staff as well as offering consultation. Whistleblowers who report cases in good faith shall be protected.

ANNUAL REPORT 2014

99

2. Whistleblowing Scope

When there are reasonable doubts or concerns about non-compliance with the laws, rules, good corporate governance principles, code of business conducts, policies, regulations or requirements of the Company, employees and staff should seek consultation from their supervisors. Or, they can report their concerns and complaints through the following channels:

• Cases related to other units or upper-level management should be filed with CG Report or the Company Secretariat or Internal Audit or the Audit Committee.

• Cases related to the CEO should be filed with the Audit Committee.

3. Whistleblowers

Employees or staff of Ichitan group and third parties who witness or have concern about non-compliance of the Company’s executives, employees or staff with the laws, rules, good corporate governance principles, code of business conducts, policies, regulations or requirements of the Company can raise their concerns.

4. Whistleblower Protection

Employees or staff who report cases, concerns, evidence or useful information within the scope as mentioned in 2 above with good faith shall be reasonably protected by the Company from victimization such as job transfer, suspension, intimidation, disturbance or employment termination or any other form of unfair treatment. Change to or cancellation of the protection program shall be subject to prior approval from the Audit Committee.

• Claimers/informants can choose to remain their anonymity. In order to be better able to respond to any information or complaint, the Company would prefer the claimers/informants to reveal their identities to the Company.

• Information related to concerns and complaints raised shall be treated with confidentiality and claimers and informants will be protected against unfair treatment and retaliation.

• The Company may tighten its whistleblower protection program upon request by claimers/informants or as the Company deems appropriate.

• Remedial actions will be undertaken on the basis of appropriateness and fairness to abate the injury suffered by victims.

5. Whistleblowing Channels

5.1 CG Report

• Telephone: 02-716-5555

• E-mail : [email protected]

5.2 Company Secretariat

• Address: Company Secretariat, Ichitan Group Public Company Limited

28th Floor, Charn Issara II Building, 2922/301-303, New Pethchburi Road, Bangkapi, Huaykwang, Bangkok, 10310

100

5.3 Internal Audit

• Telephone: 02-716-5555

• E-mail : [email protected]

• Address:

Internal Audit, Ichitan Group Public Company Limited


5.4 Audit Committee

• E-mail

Audit Committee: [email protected]

Secretary to the Audit Committee: [email protected]

The cases received via this channel will be proposed to the Audit Committee, investigated and reported to the Board.

• Address:

Audit Committee, Ichitan Group Public Company Limited


6. Related Parties

Parties related to the whistleblowing process include:

6.1. Callers or claimers: Persons, including internal and external parties, who report cases to the Company.

6.2. Case coordinators: Persons in charge of receiving cases and retaining relevant information and results, namely CG Report, Company Secretariat and Internal Audit.

6.3. Case owners: Direct supervisors of employees who are complained or executives directly in charge of the units which are complained. In case where such case owners are not available for a long period of time, their supervisors shall assume the role of case owners in their stead.

6.4. Disciplinary action owners: Human Resources (HR).

6.5. Chief Executive Officer (CEO): Top executive of the Company.

6.6. Audit Committee

6.7. Board of Directors

7. Process

7.1. Case registration and escalation

ANNUAL REPORT 2014

101

(1) Case coordinators register cases reported and determine the date the case progress will be reported back to callers/claimers according to the following guideline:

• Cases which have serious impact on the Company’s reputation shall be handled immediately.

• Other cases shall be handled as soon as possible.

• General inquiries such as inquiries about share prices and dividend payment shall not be registered bit shall be forwarded to relevant units.

(2) Case coordinators shall record the following information:

• Name of caller/claimer, unless in the case of anonymity.

• Date of case reporting

• Name of person complained or subject of complaint

• Other relevant information

(3) Following the registration, the classification levels of the cases shall be identified (except for general inquiries) and the following actions shall be undertaken:

• Cases shall be escalated to case owners for investigation and consideration of actions to be undertaken within their scope of authority.

• Cases shall be reported to Human Resources for information which shall provide consultation or initiate disciplinary action or other action as applicable.

• Cases shall also be reported to CEO.

• Cases and complaints related to the CEO shall be escalated to the Audit Committee.

7.2. Investigation and action

• Case owners investigate the cases and instruct complainees and related parties to improve their behaviors and conducts. If disciplinary actions must be undertaken, case owners shall consult with Human Resources and impose disciplinary punishment against complianees in accordance with applicable disciplinary standard. If case owners do not have the authority to punish complianees, such cases shall be escalated to authorized persons whereas the investigation results, actions taken and punitive measures to be implemented shall be submitted to CEO through supervisors of case owners in accordance with the line of command for information or instruction.

• If the callers/claimers are anonymous and available information is not sufficient, case owners shall submit investigation results and their opinions to CEO through their supervisors in accordance with the line of command in order to solicit guidance and instruction. If CEO is of the opinion that such cases cannot be proceeded, the cases will be closed and reported to case coordinators concerned in order to report the case closure to the Audit Committee.

• If the investigation conducted by case owners reveals that complainees are innocent or the cases are caused by misunderstanding or if the complianees and persons involved have been admonished to demonstrate proper conducts and it is thus concluded that the cases should be closed without any punishment, the case owners should submit the cases to their supervisors (1 level above) to seek approval for case closure. The cases shall also be reported to the case coordinators, who will inform the callers/ claimers of the update,

102

• Complaints related to CEO shall be investigated by the Audit Committee and escalated to the Board for instruction.

7.3. Response to Caller/Claimer and Rectification

• Case owners shall follow the instructions of CEO or the Board (as applicable) and recommended proper conducts which should be demonstrated. The results shall be reported to case coordinators.

• Case coordinators report the results to callers/claimers and record the case results which shall be presented to the Audit Committee on a quarterly basis.

• Case coordinators shall follow up on corrective actions (if any) and report the results thereof to CEO and the Audit Committee.

7.4. Malicious whistleblowing or use of wrong whistleblowing channels

Complaints, whistleblowing, statements and information which are reported with malicious intention or through incorrect channels could result in disciplinary actions or legal actions may be taken against individuals committing such offence.

7.5. If case coordinators or case owners demonstrate ignorance or do not comply with this policy, they and their supervisors shall be subject to disciplinary actions.

Respect for Human RightsPolicy on Human Rights The Board respects the human right laws and principles and recognizes that all humans are born free and equal in dignity and rights without distinction of any kind, such as social origin, race, nationality, color, sex, religion, age, language, physical and mental health, personal, financial or social status, belief, education or political or other opinions. Also, the Company has strived to foster the awareness of individuals’ rights and responsibilities towards the society and other citizens. Our policy and guidelines on human rights are as follows:

1. To operate our business in strict compliance with the human right laws and principles and educate our employees in the human right laws and principles to promote their compliance.

2. To ensure that all employees thoroughly study and strictly comply with laws applicable to their duties and responsibilities.

3. To encourage the respect for and adherence to the principles of human rights in recognition of equality and dignity of all humans.

4. To treat employees with dignity and respect as individual.

5. To avoid discrimination and offer equal employment opportunities to all individuals, including women, the disabled or the underprivileged.

6. To refrain from the acts of discrimination or preferential treatment based on race, nationality, color, sex, religion, age, language, physical and mental health, personal, financial or social status, belief, education and political opinions.

ANNUAL REPORT 2014

103

7. To ensure that our facilities are properly equipped to accommodate employees with disabilities.

8. To establish policies or measures to screen the qualifications of its major trading partners such as suppliers or contractors to ensure that they adopt the principles of fair business and do not infringe human rights.

9. To encourage employees’ involvement and respects their rights to form groups, offer recommendations or suggest suitable directors and solutions for the mutual benefits of all relevant parties and healthy relationship.

The Company has made available channels for reporting our employees’ violation of human rights including their involvement in or ignorance of such violation. Employees and parties witnessing acts of our employees which appear to be a discrimination or an infringement of human rights or the violation of the Company’s policy or the laws in this respect can report their concerns to the Company through the following channels:

• Supervisors

• Human Resources

• Office of CEO

• By mail

Human Rights Infringement Complaint Center

Ichitan Group Public Company Limited

2922/301-303, 28th Floor, New Pethchburi Road, Huaykwang,

Bangkapi, Bangkok, 10310

Email: [email protected]

Upon being notified of such infringement, the Company will proceed with further actions as deemed appropriate. Confidentiality of information and privacy of parties involved in the investigation process will be strictly protected. However, the Company cannot guarantee complete confidentiality. The investigative process may require the Company to contact the individuals who may have engaged in prohibited conduct as well as witnesses to such conduct. If the Company concludes that a violation of this policy has occurred, violators will be subject to disciplinary action, up to and including employment termination.

Fair Labor PracticeHuman resources are the most valuable asset of the organization and a key driving force that will move the Company towards its goals and sustainable growth. The Company has professionally implemented a solid and effective human resources management system, from recruitment to people development, to enhance our employees’ knowledge, potential, sense of ownership, positive attitude and sense of duty towards the organization, their family and the society. Our human resources management practices are based on the good corporate governance principles and aim to promote mutual trust. Employees are encouraged to actively participate in driving positive changes within the organization, recognize their rights and duties, and adhere to the principles of ethics and integrity. The Company complies with the fair labor treatment practices, including the laws and the code of ethics, in order to promote peace and security of the society and the sustainable growth of the organization. We have integrated the Declaration

104

on Fundamental Principles and Rights into our employee treatment practices in accordance with relevant laws and internal regulations and concurrently protect the occupational health and safety of our employees. Our fair labor practice guidelines are as follows:

Recruitment and EmploymentFor effective recruitment process, we have rigorously screened the qualifications of candidates in terms of their knowledge, competencies, experience, attitude and behaviors through written exams, tests and interview. Successful candidates shall be placed on probation which covers a period of up to 119 consecutive days, during which they shall prove their ability or potential to deliver and perform their functional duties in accordance with the Company’s standard. The Company’s recruitment is free of discrimination and offers equal opportunities to all individuals without distinction of any kind such as political opinions, age or disabilities. In addition, the Company has also put in place the mechanism to eliminate vulnerability to unequal treatment.

Employee DevelopmentIt is the Company’s policy to encourage continuous learning and development, and offer career growth opportunities and equal promotion opportunities among male and female employees. The Company has regularly reviewed and assessed its relevant practices and processes to enhance its compliance with the policies on employment and career growth promotion.

Working HoursTo avoid overwork, standard working hours are limited in accordance with applicable practices and can be divided into 2 patterns:

• Office work: Mondays to Fridays, from 08.30-17.30 hrs.

• On-site work: Working hours shall be as agreed with supervisors and customers within the scope permissible by the Labor Protection Act B.E. 2541 and applicable laws.

RemunerationThe Company offers fair remuneration to its employees in the form of salary at the rates comparable to the market and special compensation in the event of job transfer or promotion. Rewards and fringe benefits are commensurate with employees’ knowledge and competency to ensure fairness, appropriateness and equal treatment. Remuneration scheme is reviewed regularly.

Disciplinary ActionEmployees demonstrating avoidance and violation of rules and prohibition shall receive warnings from their supervisors according to basic administrative principles. The Company does not compromise or tolerate unfair punishment, or physical, verbal or psychological harassment. The severity of punishment will be considered in accordance with disciplinary procedures and based the type of offence, intention, consequence and merits whereas severance pay will be given to employees who are punished in form of employment termination in accordance with applicable labor laws.

Advocacy Against Unlawful Child LaborThe Company does not exploit child labor or forced labor or slave labor, except where such employment is within the scope permissible by the laws and complies with rules and regulations governing age, working hour, pay, health and safety.

ANNUAL REPORT 2014

105

Internal CommunicationThe Company is committed to communicating the letter and the spirit of all of its policies across the organization through mechanisms which include the onboarding program and internal communication channels of Human Resources. Formal and information meetings were held to share with our employees the Company’s performance, status and other relevant information as and when appropriate and upon internal change in order to solicit opinions from employees and encourage their involvement in driving positive changes.

Grievance ProcedureThe Company has established internal grievance procedures and channels to allow employees to air their workplace-related grievance and personal issues via email at [email protected] and raise concerns about harassment, unequal treatment, right infringement and victimization.

Positive Work EnvironmentThe Company is committed to a workplace that provides dignity and respect to promote occupational health and safety and pleasant environment. The Company also strives to encourage employees to balance their personal and work life and do exercise for their good health.

Betterment of Quality of LifeThe Company is committed to the betterment of the quality of life and well-being of our employees by encouraging them to plan their financial future and achieve work-life balance.

Responsibility Towards ConsumersThe Company has attached importance to the health and safety of our consumers and aspires to achieve the highest level of quality and hygienic product standard. Therefore, we have engaged food safety experts in our process and arranged trainings for all employees to enhance their knowledge, understanding and compliance with our standards which are in line with certification standards widely recognized. Our guidelines on responsibility towards consumers encompass the following:

• Respect the consumers’ right to satisfaction of basic needs

• Respect the consumers’ right to safety

• Respect the consumers’ right to be informed

• Respect the consumers’ right to choose

• Respect the consumers’ right to be heard

• Respect the consumers’ right to redress

• Respect the consumers’ right to consumer education

• Respect the consumers’ right to healthy environment

106

Environmental ProtectionThe Company has endeavored to protect the environment by minimizing the environmental impact of its business operations and complying with the rules and laws governing environmental protection. The Company’s guidelines on environmental protection are as follows:

• Establish environmentally friendly work process and practices

• Evaluate the results of its work processes and practices regularly

• Study and analyze the results to identify areas for improvement

• Foster environmental awareness and consciousness among our employee

Contribution to Community and SocietyThe Company is committed to the synchronous growth of its business, the community and the society to live up to its philosophy of environmental protection and social responsibility. We are fully aware that the seed of generosity grows into a great society and, as a decent corporate citizen, aim to pay back to the community through environment protection, development of the community and society, and the betterment of quality of life of local residents by creating job opportunities and diversifying economic activities to strengthen local entities and communities.

Community and society development activities have been carried out through the collaboration between the Company and local communities affected by the Company’s operations or initiatives in order to strengthen and restore cultural and environmental richness. In addition to these CSR activities for nearby communities, we have also implemented outreach program for the benefits of communities in distant areas. The Company’s CSR Policy covers the following:

• To achieve sustainable growth of the Company and concurrently contribute to environmental preservation and the society betterment.

• Utilize our business strengths and professional expertise for CSR activities.

• Initiate CSR activities for the far-reaching benefits of communities in nearby and remote areas.

• Optimize the use of renewable resources and local supplies in accordance with the sufficiency economy.

CSR RoadmapOur CSR roadmap is based on the following framework:

• Community development and contribution activities such as donation to school should be organized at least once annually.

• Emergency program in response to incidents caused by the Company’s business operations shall be immediately

ANNUAL REPORT 2014

107

Our business operations, especially our corporate social responsibility, have evolved around the awareness and sense of responsibility of our executives and employees at all levels who are determined to avoid acts which potentially cause undesirable consequences or jeopardy to others parties, including all stakeholders, the economy, the society and the environment. We also attempt to refrain from contravening the laws, rules, conditions or cultural traditions of the local communities. The Company’s operations is strictly governed by the principle of business integrity, professional ethics and good corporate governance for the ultimate goal of transparency, honesty and fairness. Our business is guided by the philosophy of sufficiency economy and operated on the basis of prudence and carefulness. Also, the Company aims to actively contribute to the betterment of the society and communities in nearby and remote areas.

Dissemination of CSR-Driven InnovationInnovations driven by our CSR goals under the Greenovation thrust have been shared with the organizations through Tan’s Land to promote resource conservation awareness and respect for the nature. The learning center showcases successful innovations which have been inspired by our commitment to corporate social responsibility and led to the shift of paradigm as well as the improvement and transformation of work processes for enhanced efficiency and effectiveness included added value for the business and all stakeholders in the longer run.

The CSR-oriented innovations, such as the production process improvement, are beneficial not only to the Company’s solid growth, competitive advantages and sustainability but also to the betterment of Thailand with respect to its economy, the well-being of Thais, and the preservation and restoration of the environment.

Innovations of the Company are meaningful to our CSR commitment. They are not only driven by our CSR goals but also, in turn, contribute to the economic and social development, value creation and the equilibrium between business imperatives and social responsibility.

Guidelines• The Company fully recognizes the benefits of socially responsible business practices to value-added

innovations.

• t is the Company’s policy to promote the advantages and benefits of socially responsible business practices in the same way it promotes the same of innovation development, especially through the Sustainability Report which illustrates our CSR activities.

• The Company aims to conceive and research for new, unconventional ideas and knowledge in respect of business, economic, social, technological and environmental development.

• The Company engages internal and external parties in its value-added innovation development processes.

• The Company keeps abreast of new studies, researches and innovations to support its innovation development projects.

• The Company aspires to develop innovations which benefit the Company and the society as a whole. Our innovations shall not cause destruction, terrorism or adverse impact on stakeholders.

108

• The Company fosters the culture of innovation in which creativity are welcomed and can be freely expressed to promote innovation from within.

• The Company collaborates with stakeholders such as trading partners on the development of CSR-driven innovations and promote CSR awareness by sharing our innovations and being a role model in CSR-driven innovation development.

• The Company regularly reviews its businesses and work processes to identify risks or undesirable impact thereof on the society and the environment in order to immediately eliminate such risks and impact, if any.

• The Company integrates its CSR commitment with business goals in the context of Thailand to balance its efforts to improve the productivity, quality and competitive advantages with its contribution to the society and the economy.

• The Company strictly protects and respects confidential information and intellectual properties of others in the same manner as it does for its confidential information and intellectual properties.

ANNUAL REPORT 2014

109

Internal Control and Risk Management

The Company has always attached significance to effective internal control system in accordance with the good corporate governance principles which aims to promote transparency, fairness, integrity, disclosure, and checks and balances for the ultimate benefits of the shareholders, employees and stakeholders.

The Audit Committee, at its Meeting No. 1/2015 held on 25 February 2015, and the Board of Directors, at its Meeting No. 1/2015 held on 25 February 2015, with the participation of the 3 Audit Committee members reviewed and assessed the adequacy of the Company’s internal control system through the interview of the Company’s management team and the internal control adequacy assessment questionnaire which addressed 5 dimensions of the internal controls: 1) Control environment 2) Risk assessment 3) Control activities 4) Information and communication 5) Monitoring activities.

The Company has established the Internal Control Policy and the Risk Management Policy and the Audit Committee has been delegated to review and assess the internal control system to ensure that it is adequate and appropriate for the Company’s business operation. In this regard, Mr. Sumol Hobampen has been appointed as the internal auditor.

The Board is of the view that the Company’s internal control system is adequate and appropriate for its business operations. The Board has also encouraged the management team to continuous enhance the Company’s internal control system to promote good corporate governance. The results of the internal control system assessment which have been reviewed by the management team are as follows:

Control EnvironmentThe Company has good organizational structure and environment which contribute to the effective implementation of the internal control system in accordance with the Company’s plan and policy. The Board has emphasized and adhered to the principles of integrity, legitimacy and ethics as well as fostered the awareness and environment that are conducive to effective internal control and a sense of duty and responsibility across the organization. In addition, our organizational structure also enhances the management’s effectiveness. To support the internal control system, the Company has established clear and measurable business goals, policies, work processes, scope of authority, duty and responsibility of each line of operations. KPIs have also been reasonably and fairly set and deployed for the achievement of the corporate business goals as well as the checks and balances. The internal audit team directly reports to the Audit Committee and has a dotted line relationship with the Board. The Company also has in place the human resources management policy as a framework for effective recruitment, development, retention and motivation of quality employees who possess desired capabilities, knowledge, skills and traits which contribute to the achievement of the Company’s goals.

Risk AssessmentThe Company’s executives have attached significance to risk management and the Company’s risk assessment methodology has been aligned to its business objectives and goals. Prevailing and potential

110

risks have been identified, analyzed and assessed to devise appropriate risk monitoring and control measures to minimize risk probability and impact. Comprehensive risk analysis has been conduct to identify the materiality of internal and external risk factors such as changes in consumer behaviors, raw material shortage, intense competition, business imperative for new product development, debt servicing ability, access to finance, and interest rate increase on the Company’s operations, business and goal achievement. Internal fraud is another risk issue that the Company has seriously addressed and prevented through the communication and implementation of the Whistleblowing Policy across the organization. Practices and policies have been regularly reviewed and updated to employees. Our management team is fully aware of changes and their associated risk and has adequately and appropriately monitored the causes of risks. The Risk Management Committee which directly reports to the Board regularly meets to strategically prevent, mitigate and manage risks which might harm the Company’s performance, business or reputation. The Company also has a dedicated risk management team in charge of risk management, monitoring and assessment.

Control ActivitiesThe Company has effectively controlled operations executed by the management team through the clear written scope of approval authority and limits of executives at each level in, segregation of duties and organizational structure which contributes to clear scope of duties and responsibilities and line of command of every division. Related-party transactions and potential conflicts of interest are escalated to the Audit Committee for consideration and to the Board for approval in strict compliance with applicable procedures, rules and regulations.

Information and CommunicationThe Company’s data storage and information systems which are adequate and can effectively support its business operations. Data and information related to internal control have also been compiled, used for control activities and communicated to relevant employees at each level based on their scope of responsibility for correct and mutual understanding. The Board has been supplied with adequate information to support their decision-making. In addition, meeting documents have been delivered to the directors prior to each Board meeting in accordance with the regulatory requirements. Documents are filed and retained systematically by category and accounting and financial documents which are essential for financial reporting are reviewed by the Board. The Company has also established effective and appropriate internal and external communication tools to provide our staff with convenient access to information necessary for their performance of duties and our stakeholders with channels to voice their suggestions/complaints as well as share and retrieve information through, for example, our consumer hotline/call center and investor relations.

ANNUAL REPORT 2014

111

Monitoring ActivitiesThe Audit Committee reviewed and approved the annual audit plan of the Company as well as jointly deliberated on audit findings and issues with the internal audit team. The auditor was also invited to present the results of financial statements audits and internal control issues to the Audit Committee. The Company has regularly monitored its internal control performance through the internal audit team to ensure compliance with established policies and operating procedures. Compliance monitoring reports have also been prepared and presented to the Audit Committee and the Board for consideration to support corrective actions required.

Monitoring activities have been regularly undertaken by the Company to monitor and evaluate in-process and after-action internal control against established targets by taking into account the ever-changing operating environment of the Company.

Profile of Internal Audit Head

Name-Surname : Mr. Sumol Hobumphen

Position : Internal Audit Manager

Age : 37 years

Nationality : Thai

Education/Training :

• Master of Science in Corporate Governance, Chulalongkorn University

• Bachelor of Accounting, Rajamangala University of Technology, Phanakhon

• Certified public accountant, Federation of Accounting Professions Under the Royal Patronage

• Endorsed Internal Auditing Program (EIAP), Class 9, Chulalongkorn University

• Internal Auditing Program, Federation of Accounting Professions Under the Royal Patronage

Shareholding (%) : None

Family Relationship with Executives : None

Work Experience :

• Positions in companies listed on the Stock Exchange of Thailand


2013 – Present Manager, Internal Audit Ichitan Group Pcl.

2006 – 2009 Assistant Manager, Internal Audit Thanulux Pcl.

• Positions in companies not listed on the Stock Exchange of Thailand


2011 – 2013 Manager, Internal Audit Perfect Engineering Service Pcl.

1999 – 2006 Assistant Manager, Internal Audit Division Dr. Virach & Associates Office

Number of Internal Audit Team Personnel

• The Company’s internal audit team consists of 2 members.

112

Related-Party Transaction

Related Party and Relationship

Related Party Relationship1. Mr. Tan Passakornnatee (Mr. Tan) • Director and major shareholder of the Company2. Mrs. Eng Passakornnatee (Mr. Eng) • Director and major shareholder of the Company3. I Am Green Tea Co., Ltd. (IGT)Distributes

beverage products of the Company and is granted the right from Mr. Tan Passakornnatee to produce and sell products with Mr. Tan’s pictures, drawings, symbols and work of design of Mr. Tan Passakornnatee for 5 years.

• Miss Tantita Passakornnatee, the elder sister of Mr. Tan Passakornnatee owns 80% equity in IGT.

4. Japanese Prime Restaurants Management Co., Ltd. (JPRM) Operates restaurant business

• Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee are directors of both Ichitan and JPRM.

• Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee are major shareholders owning the aggregate equity of 86% in JPRM.

5. Passakornnatee Co., Ltd. (PAS) Operates hotel business

• Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee are directors of both Ichitan and PAS.

• Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee are major shareholders owning the aggregate equity of 80% in PAS.

6. Kin Kub Tan Co., Ltd. (KIN) Operates restaurant business

• Mrs. Eng Passakornnatee is director of both Ichitan and KIN.

• Mrs. Eng Passakornnatee is major shareholder owning 79.7% equity in KIN.

7. Tan Asset Co., Ltd. (TAN) Operate land leasing and soccer field rental service

• Mr. Tan Passakornnatee, Mrs. Eng Passakornnatee and Miss Varisa Passakornnatee, Mr. Tan’s daughter, are major shareholders owning the aggregate equity of 91.1% in TAN.

8. Ezili Co., Ltd. (EZL) Operates restaurant business

• Mr. Tan Passakornnatee, Mrs. Eng Passakornnatee and Mr. Jaruworn Sukpanthaworn, Mrs. Eng’s younger brother, are major shareholders owning the aggregate equity of 54% in EZL.

9. Kin Rong Deum Co., Ltd. (KRD)Restaurant and karaoke business

• Mrs. Eng Passakornnatee is the major shareholder owning 48.8% in KRD.

10. Tan Boon Co., Ltd. (TANBOON) Operates real estate business

• Mr. Tan Passakornnatee and Mrs. Eng Passakornnatee are directors of both Ichitan and TANBOON.

• Mr. Tan Passakornnatee, Mrs. Eng Passakornnatee and Miss Varisa Passakornnatee, Mr. Tan’s daughter, are major shareholders owning the aggregate equity of 90% in TANBOON.

ANNUAL REPORT 2014

113

Related Party Transaction

Transaction Value (MB)

Necessity and Rationale2013 2014

1. I Am Green Tea Co., Ltd. (IGT)

Revenue from sales

Outstanding balance at the end of the accounting period

1,034.43

206.92

782.08

38.24

•Sales of the Company’s beverage products to IGT which is the Company’s distributor through the traditional trade channel under the agreement dated 20 June 2011, effective from 1 July 2011 – 30 June 2014. The agreement was renewed on 20 June 2014 and is valid from 1 July 2014 – 30 June 2017.

•IGT must buy beverages at the selling prices determined by the Company as of the date IGT sells beverages to its customers. The Company issues invoices at the selling prices comparable to those applied to other traditional trade distributors of the Company.

•Audit Committee’s Opinion

The Audit Committee viewed that the target customers of IGT did not overlap with those of other distributors of the Company and this distribution through IGT would help expand the Company customer base. Product pricing applicable to IGT was fair, competitive and higher than other trading partners. Therefore, the Audit Committee concluded that the transactions were reasonable and in the normal course of business operations.

Expenses on sales promotion (giveaways)

Outstanding balance at the end of the accounting period

13.86

-

40.86

10.07

•Reimbursements paid to distributors for giveaways offered to customers under the monthly sales promotion in accordance with the distribution agreements. The monthly reimbursements were calculated at the same prices charged to IGT and approved by Senior Executive Vice President.

•Audit Committee’s Opinion

The Audit Committee opined that the monthly giveaway promotions were beneficial to the Company and was in the normal course of business operations. Monthly giveaway promotions were reviewed by executives and approved by Senior Executive Vice President. The reimbursements were calculated at the same prices charged to IGT and the practice has been applied consistently to all distributors of the same channel.

Related-Party TransactionRelated-party transactions of the Company in 2013 and 2014 did not cause conflicts of interest and are listed below:

114

Rela

ted

Party

Tran

sact

ion

Tran

sact

ion

Valu

e (M

B)N

eces

sity

and

Rat

iona

le20

1320

14

1.

IGT

(Con

t.)Ex

pens

es o

n pr

omot

iona

l ca

mpa

ign

- Fr

idge

sOu

tsta

ndin

g ba

lanc

e at

th

e en

d of

the

acco

untin

g pe

riod

0.09

0.09

- -

•Th

e Co

mpa

ny s

pons

ored

bev

erag

e fri

dges

to 5

ope

rato

rs, i

.e. 2

food

cou

rts (1

frid

ge fo

r eac

h),

1 sc

hool

(1 fr

idge

), 1

rest

aura

nt (2

frid

ges)

and

1 T

V pr

ogra

m p

rodu

ctio

n co

mpa

ny (1

frid

ge)

to s

how

case

the

Com

pany

’s p

rodu

cts

in it

s TV

pro

gram

s. O

pera

tors

can

req

uest

bev

erag

e fri

dges

from

the

Com

pany

thro

ugh

IGT

whi

ch w

ould

forw

ard

the

requ

est t

o Tr

aditi

onal

Tra

de

& E

vent

Mar

ketin

g Di

rect

or fo

r ap

prov

al. T

he m

odel

s an

d si

ze o

f bev

erag

e fri

dges

will

be

deci

ded

by th

e Co

mpa

ny w

hile

IGT

will

han

dle

the

fridg

e pu

rcha

se a

nd d

eliv

ery

to o

pera

tors

. Th

e co

sts

will

then

be

char

ged

to th

e Co

mpa

ny w

ithou

t mar

kup.

The

se tr

ansa

ctio

ns w

ere

in a

ccor

danc

e w

ith t

he C

ompa

ny’s

Bev

erag

e Fr

idge

Spo

nsor

ship

Pol

icy

of t

he C

ompa

ny

whi

ch h

as b

een

com

mun

icat

ed to

all

oper

ator

s. E

ntitl

ed o

pera

tors

mus

t mee

t the

follo

win

g qu

alifi

catio

n re

quire

men

ts a

nd c

riter

ia:

»Qu

alifi

catio

ns: 1

) The

pla

ce o

f bus

ines

s m

ust b

e in

a p

opul

ated

are

a an

d th

e re

ques

t mus

t be

initi

ated

by

an o

pera

tor.

2) A

vera

ge s

ales

in th

e pr

evio

us 6

mon

ths

mus

t be

at le

ast 3

0 cr

ates

pe

r mon

th. 3

) The

dec

isio

n sh

all b

e at

the

Com

pany

’s d

iscr

etio

n.

»Co

nditi

ons:

1)

Trad

emar

k la

bels

as

dete

rmin

ed b

y th

e Co

mpa

ny m

ust

be a

ttach

ed t

o th

e fri

dges

. 2) T

here

mus

t be

at

leas

t 80

% o

f Ich

itan

beve

rage

s in

the

frid

ge. I

GT s

ales

re

pres

enta

tives

will

info

rm th

e op

erat

ors

of te

rms

and

cond

ition

s in

furth

er d

etai

ls u

pon

the

fridg

e ha

ndov

er.

»Re

pair

cost

s: R

epai

r cos

ts in

curr

ed d

urin

g th

e fir

st 3

yea

rs fr

om th

e fri

dge

hand

over

dat

e sh

all b

e ab

sorb

ed b

y th

e Co

mpa

ny a

t 50

% o

r le

ss a

nd w

ill b

e re

imbu

rsed

thr

ough

the

di

strib

utor

s.•

Audi

t Com

mitt

ee’s

Opi

nion

This

cou

ld b

e co

nsid

ered

a p

rom

otio

nal a

ctiv

ity w

hich

hel

ped

stre

ngth

en t

he C

ompa

ny’s

br

and

pres

ence

and

pro

duct

s. A

ll of

thes

e tra

nsac

tions

wer

e in

acc

orda

nce

with

the

Beve

rage

Fr

idge

Spo

nsor

ship

Pol

icy

and

the

qual

ifica

tions

of t

he o

pera

tors

requ

este

d fo

r the

frid

ges

wer

e co

nsid

ered

car

eful

ly b

y Tr

aditi

onal

Tra

de &

Eve

nt M

arke

ting

Dire

ctor

. The

pay

back

per

iod

is

less

than

1 y

ear c

onsi

derin

g th

e co

st o

f frid

ges

and

sale

s pe

rform

ance

of t

hose

ope

rato

rs p

lus

the

extra

ben

efit

of b

rand

pro

mot

ion.

For t

he s

pons

orsh

ip tr

ansa

ctio

n to

TV

prod

uctio

n co

mpa

ny, t

he C

ompa

ny re

ceiv

ed th

e be

nefit

s of

pro

mot

ing

its p

rodu

cts

and

bran

ds o

n TV

pro

gram

. IGT

cha

rged

the

Com

pany

for t

he fr

idge

s at

thei

r cos

ts a

nd w

ere

com

para

ble

to o

ther

dis

tribu

tors

. Thu

s, th

e tra

nsac

tions

wer

e co

nsid

ered

re

ason

able

and

ben

efic

ial t

o th

e Co

mpa

ny.

ANNUAL REPORT 2014

115

Rela

ted

Party

Tran

sact

ion

Tran

sact

ion

Valu

e (M

B)N

eces

sity

and

Rat

iona

le20

1320

14

1.

IGT

(Con

t.)Ex

pens

es o

n pr

omot

iona

l ca

mpa

ign

- Fr

idge

sOu

tsta

ndin

g ba

lanc

e at

th

e en

d of

the

acco

untin

g pe

riod

0.09

0.09

- -

•Th

e Co

mpa

ny s

pons

ored

bev

erag

e fri

dges

to 5

ope

rato

rs, i

.e. 2

food

cou

rts (1

frid

ge fo

r eac

h),

1 sc

hool

(1 fr

idge

), 1

rest

aura

nt (2

frid

ges)

and

1 T

V pr

ogra

m p

rodu

ctio

n co

mpa

ny (1

frid

ge)

to s

how

case

the

Com

pany

’s p

rodu

cts

in it

s TV

pro

gram

s. O

pera

tors

can

req

uest

bev

erag

e fri

dges

from

the

Com

pany

thro

ugh

IGT

whi

ch w

ould

forw

ard

the

requ

est t

o Tr

aditi

onal

Tra

de

& E

vent

Mar

ketin

g Di

rect

or fo

r ap

prov

al. T

he m

odel

s an

d si

ze o

f bev

erag

e fri

dges

will

be

deci

ded

by th

e Co

mpa

ny w

hile

IGT

will

han

dle

the

fridg

e pu

rcha

se a

nd d

eliv

ery

to o

pera

tors

. Th

e co

sts

will

then

be

char

ged

to th

e Co

mpa

ny w

ithou

t mar

kup.

The

se tr

ansa

ctio

ns w

ere

in a

ccor

danc

e w

ith t

he C

ompa

ny’s

Bev

erag

e Fr

idge

Spo

nsor

ship

Pol

icy

of t

he C

ompa

ny

whi

ch h

as b

een

com

mun

icat

ed to

all

oper

ator

s. E

ntitl

ed o

pera

tors

mus

t mee

t the

follo

win

g qu

alifi

catio

n re

quire

men

ts a

nd c

riter

ia:

»Qu

alifi

catio

ns: 1

) The

pla

ce o

f bus

ines

s m

ust b

e in

a p

opul

ated

are

a an

d th

e re

ques

t mus

t be

initi

ated

by

an o

pera

tor.

2) A

vera

ge s

ales

in th

e pr

evio

us 6

mon

ths

mus

t be

at le

ast 3

0 cr

ates

pe

r mon

th. 3

) The

dec

isio

n sh

all b

e at

the

Com

pany

’s d

iscr

etio

n.

»Co

nditi

ons:

1)

Trad

emar

k la

bels

as

dete

rmin

ed b

y th

e Co

mpa

ny m

ust

be a

ttach

ed t

o th

e fri

dges

. 2) T

here

mus

t be

at

leas

t 80

% o

f Ich

itan

beve

rage

s in

the

frid

ge. I

GT s

ales

re

pres

enta

tives

will

info

rm th

e op

erat

ors

of te

rms

and

cond

ition

s in

furth

er d

etai

ls u

pon

the

fridg

e ha

ndov

er.

»Re

pair

cost

s: R

epai

r cos

ts in

curr

ed d

urin

g th

e fir

st 3

yea

rs fr

om th

e fri

dge

hand

over

dat

e sh

all b

e ab

sorb

ed b

y th

e Co

mpa

ny a

t 50

% o

r le

ss a

nd w

ill b

e re

imbu

rsed

thr

ough

the

di

strib

utor

s.•

Audi

t Com

mitt

ee’s

Opi

nion

This

cou

ld b

e co

nsid

ered

a p

rom

otio

nal a

ctiv

ity w

hich

hel

ped

stre

ngth

en t

he C

ompa

ny’s

br

and

pres

ence

and

pro

duct

s. A

ll of

thes

e tra

nsac

tions

wer

e in

acc

orda

nce

with

the

Beve

rage

Fr

idge

Spo

nsor

ship

Pol

icy

and

the

qual

ifica

tions

of t

he o

pera

tors

requ

este

d fo

r the

frid

ges

wer

e co

nsid

ered

car

eful

ly b

y Tr

aditi

onal

Tra

de &

Eve

nt M

arke

ting

Dire

ctor

. The

pay

back

per

iod

is

less

than

1 y

ear c

onsi

derin

g th

e co

st o

f frid

ges

and

sale

s pe

rform

ance

of t

hose

ope

rato

rs p

lus

the

extra

ben

efit

of b

rand

pro

mot

ion.

For t

he s

pons

orsh

ip tr

ansa

ctio

n to

TV

prod

uctio

n co

mpa

ny, t

he C

ompa

ny re

ceiv

ed th

e be

nefit

s of

pro

mot

ing

its p

rodu

cts

and

bran

ds o

n TV

pro

gram

. IGT

cha

rged

the

Com

pany

for t

he fr

idge

s at

thei

r cos

ts a

nd w

ere

com

para

ble

to o

ther

dis

tribu

tors

. Thu

s, th

e tra

nsac

tions

wer

e co

nsid

ered

re

ason

able

and

ben

efic

ial t

o th

e Co

mpa

ny.

Rela

ted

Party

Tran

sact

ion

Tran

sact

ion

Valu

e (M

B)N

eces

sity

and

Rat

iona

le20

1320

14

1.

IGT

(Con

t.)Ex

pens

es o

n pr

omot

iona

l ac

tiviti

es –

pr

emiu

m g

ifts

Outs

tand

ing

bala

nce

at

the

end

of th

e ac

coun

ting

perio

d

1.55 -

1.16 -

•Pu

rcha

se o

f spe

cial

ly-d

esig

ned

prem

ium

gift

s (M

r. Ta

n fig

urin

es a

nd g

ifts s

uch

as b

ags,

mon

ey

boxe

s an

d dr

inki

ng g

lass

es d

ispl

ayed

at T

an’s

Lan

d at

Roj

ana

Indu

stria

l Par

k in

Ayu

tthay

a)

•Th

e tra

nsac

tions

wer

e in

acc

orda

nce

with

the

licen

se a

gree

men

t dat

ed 1

Jul

y 20

11 m

ade

betw

een

the

Com

pany

and

IGT

to a

utho

rize

the

prod

uctio

n an

d di

strib

utio

n of

pro

duct

s w

ith

pict

ures

of M

r.Tan

incl

udin

g pr

oduc

ts fe

atur

ing

his

draw

ings

, sym

bols

and

wor

k of

des

ign,

su

bjec

t to

the

cond

ition

that

suc

h pr

oduc

ts m

ust b

e so

ld o

nly

to e

ntiti

es w

hich

Mr.

Tan

serv

es

as a

dire

ctor

or

hold

sha

res

in. N

o lic

ense

fee

was

cha

rged

but

Mr.

Tan

rese

rved

the

right

to

dic

tate

the

selli

ng p

rices

of s

uch

prod

ucts

and

IGT

can

mar

k up

the

pric

es o

nly

by 1

0%

at a

max

imum

as

its m

anag

emen

t fee

.Au

dit C

omm

ittee

’s O

pini

onSa

le o

f gift

s w

ith M

r. Ta

n’s

pict

ures

and

wor

ks o

f des

ign

orig

inat

ed fr

om th

e Co

mpa

ny’s

driv

e to

qui

ckly

est

ablis

h its

bra

nd p

rese

nce

at th

e in

itial

sta

ge o

f the

Com

pany

. Thu

s, M

r. Ta

n w

as th

e Co

mpa

ny’s

pre

sent

er a

nd p

rodu

cts

bear

ing

his

pict

ures

and

wor

ks o

f des

igns

wer

e di

spla

yed

and

sold

to v

isito

rs. N

onet

hele

ss, t

he C

ompa

ny w

ould

not

link

its

bran

d im

age

entir

ely

to M

r. Ta

n an

d ha

s pl

anne

d to

eng

age

othe

r pre

sent

ers

in it

s pr

omot

iona

l act

iviti

es

and

adve

rtise

men

ts in

the

futu

re. M

oreo

ver,

the

Com

pany

com

mer

cial

ly s

old

such

pro

duct

s to

end

-con

sum

ers

at a

pro

fit. T

hus,

the

trans

actio

ns w

ere

bene

ficia

l to

the

Com

pany

and

co

nditi

ons

of th

e tra

nsac

tions

wer

e in

line

with

the

licen

se a

gree

men

t. Th

e Au

dit C

omm

ittee

op

ined

that

the

trans

actio

ns w

ere

reas

onab

le, f

air a

nd b

enef

icia

l to

the

Com

pany

.

116

Rela

ted

Party

Tran

sact

ion

Tran

sact

ion

Valu

e (M

B)N

eces

sity

and

Rat

iona

le20

1320

14

1.

IGT

(Con

t.)Tr

ansp

orta

tion

expe

nses

Outs

tand

ing

bala

nce

at

the

end

of th

e ac

coun

ting

perio

d

0.57

0.02

0.05 -

•Th

e pr

omot

iona

l cam

paig

ns le

d to

a s

urge

in d

eman

d fo

r Ich

itan

prod

ucts

and

the

Com

pany

co

uld

not d

eliv

er th

e pr

oduc

ts to

IGT’

s di

strib

utio

n ce

nter

on

time.

The

refo

re, I

GT’s

par

tner

s hi

red

trans

porta

tion

truck

s to

pick

up

the

prod

ucts

at t

he C

ompa

ny’s

fact

ory

whi

le th

e Co

mpa

ny

was

resp

onsi

ble

for t

he a

ctua

l tra

nspo

rtatio

n ex

pens

es.

•Au

dit C

omm

ittee

’s O

pini

on

The

Audi

t Com

mitt

ee v

iew

ed th

at th

e tra

nsac

tions

orig

inat

ed fr

om ca

uses

bey

ond

the

Com

pany

’s

cont

rol a

nd th

e hi

ke in

dem

and

durin

g th

e pr

omot

ion

perio

ds. T

he g

oods

pic

kup

by IG

T’s p

artn

ers

at th

e Co

mpa

ny’s

fact

ory

was

rea

sona

ble

and

help

ed p

reve

nt th

e sh

orta

ge o

f the

Com

pany

’s

prod

ucts

in th

e m

arke

t whi

ch, i

f hap

pene

d, w

ould

har

m th

e Co

mpa

ny’s

repu

tatio

n. In

add

ition

, th

e tra

nspo

rtatio

n se

rvic

e w

as c

harg

ed a

t th

e ac

tual

cos

ts a

nd m

arke

t co

mpa

rabl

e. T

hus,

th

e tra

nsac

tions

wer

e co

nsid

ered

reas

onab

le.

ANNUAL REPORT 2014

117

Rela

ted

Party

Tran

sact

ion

Tran

sact

ion

Valu

e (M

B)N

eces

sity

and

Rat

iona

le20

1320

14

1.

IGT

(Con

t.)Au

to p

art

expe

nses

Outs

tand

ing

bala

nce

at

the

end

of th

e ac

coun

ting

perio

d

(The

se

trans

actio

ns w

ill

not r

ecur

.)

0.14 -

- -

•Th

ese

trans

actio

ns in

clud

ed a

rep

air

in M

ay 2

013

whi

ch c

ost B

aht 6

8,22

4. T

he r

epai

r w

as

nece

ssar

y fo

r th

e Co

mpa

ny’s

tru

ck w

hich

bro

ke d

own

durin

g th

e de

liver

y of

goo

ds t

o a

sale

s pr

omot

ion

even

t out

side

Ban

gkok

. The

repa

ir co

st a

ccor

ding

to a

n au

thor

ized

dea

ler’s

as

sess

men

t was

Bah

t 150

,000

. How

ever

, exp

ert a

utom

otiv

e m

echa

nics

adv

ised

the

Com

pany

to

buy

spar

e pa

rts fr

om a

third

-par

ty sp

are

part

deal

er w

hich

has

pro

vide

d se

rvic

es a

nd o

ffere

d sp

ecia

l dis

coun

t to

IGT

beca

use

it w

as a

sec

ond-

hand

truc

k th

at h

ad b

een

in u

se fo

r 8 y

ears

an

d w

as n

o lo

nger

cov

ered

by

the

auth

oriz

ed d

eale

rs’ p

rote

ctio

n pl

an. T

he IG

T m

echa

nics

co

ordi

nate

d th

e re

pair

and

the

purc

hase

of s

pare

par

ts fo

r the

Com

pany

by

usin

g IG

T’s c

redi

ts.

The

expe

nses

wer

e su

bseq

uent

ly c

harg

ed b

y IG

T to

the

Com

pany

and

the

cost

s of

repa

ir an

d sp

are

parts

wer

e ar

ound

4%

che

aper

that

the

cost

s ch

arge

d by

car

repa

ir ce

nter

s in

gen

eral

.•

The

rem

aini

ng 5

tran

sact

ions

occ

urre

d in

the

seco

nd q

uarte

r (2

trans

actio

ns) a

nd th

e th

ird

quar

ter (

3 tra

nsac

tions

) whi

ch w

ere:

1) C

hang

e of

tire

s fo

r 1 tr

uck

(4 ti

res)

whi

ch c

ost B

aht

11,6

57 b

ecau

se it

was

foun

d du

ring

the

trans

porta

tion

of g

oods

to IG

T th

at th

e tir

es w

orn

out.

The

tire

chan

ge s

ervi

ce a

s pr

ovid

ed b

y a

third

-par

ty g

arag

e at

pai

d on

IGT’

s cr

edit.

2)

Chan

ge o

f ant

i-vi

brat

ion

mou

ntin

g w

hich

cos

t Bah

t 10,

006

beca

use

the

old

mou

ntin

g w

as

dam

aged

. 3) C

hang

e of

bra

ke s

et w

hich

cos

t Bah

t 9,7

44 to

repl

ace

the

old

set.

4) C

hang

e of

ai

r com

pres

sor w

hich

cos

t Bah

t 26,

407

beca

use

the

old

one

burn

ed u

p an

d le

aked

. 5) C

hang

e of

air

cond

ition

er w

hich

cos

t Bah

t 11,

340

to re

plac

e th

e ol

d on

e w

hich

leak

ed. T

he C

ompa

ny

boug

ht sp

are

parts

from

third

-par

ty g

arag

es/s

hops

that

IGT

is a

mem

ber b

y us

ing

IGT’

s cre

dits

fo

r spe

cial

dis

coun

ts a

nd IG

T’s a

utom

otiv

e m

echa

nics

hel

ped

with

the

purc

hase

s and

repa

irs.

•Ex

pens

es fr

om a

ll of

the

afor

esai

d tra

nsac

tions

wer

e pa

id b

y IG

T an

d su

bseq

uent

ly re

imbu

rsed

by

the

Com

pany

at t

he a

ctua

l cos

t plu

s th

e se

rvic

e fe

e of

up

to 5

%. T

he C

ompa

ny d

id n

ot h

ave

a po

licy

to p

rocu

re a

utom

otiv

e re

pair

serv

ices

from

IGT

but t

he in

cide

nts

wer

e un

expe

cted

. Su

ch tr

ansa

ctio

n di

d no

t occ

ur in

the

four

th q

uarte

r and

will

not

recu

r in

the

futu

re.

•Au

dit C

omm

ittee

’s O

pini

onTh

e Au

dit

Com

mitt

ee v

iew

ed t

hat

the

Com

pany

had

its

own

cont

ract

ual g

arag

es b

ut t

he

inci

dent

s w

ere

unex

pect

ed a

nd b

eyon

d th

e Co

mpa

ny’s

con

trols

. In

addi

tion,

IGT

mec

hani

cs

had

prof

essi

onal

exp

ertis

e in

the

aut

omot

ive

repa

ir an

d th

e Co

mpa

ny r

ecei

ved

spec

ial

disc

ount

s fro

m g

arag

es th

roug

h IG

T. T

hus,

the

trans

actio

ns w

ere

cons

ider

ed r

easo

nabl

e.

How

ever

, the

Aud

it Co

mm

ittee

em

phas

ized

that

in th

e fu

ture

the

Com

pany

mus

t coo

rdin

ate

the

vehi

cle

repa

irs it

self

and

assi

stan

ce c

ould

be

aske

d fro

m IG

T on

ly fo

r spe

cial

dis

coun

ts

whi

ch g

arag

es o

ffere

d to

IGT

as a

freq

uent

cus

tom

er. A

ll fu

ture

veh

icle

repa

ir tra

nsac

tions

m

ust b

e m

ade

in th

e na

me

of th

e Co

mpa

ny a

nd p

aid

dire

ctly

by

the

Com

pany

. Thu

s, th

ese

trans

actio

ns w

ill n

ot re

cur i

n th

e fu

ture

.

118

Rela

ted

Party

Tran

sact

ion

Tran

sact

ion

Valu

e (M

B)N

eces

sity

and

Rat

iona

le20

1320

14

2.

Japa

nese

Pr

ime

Rest

aura

nts

Man

agem

ent

Co.,

Ltd.

(J

PRM

)

Food

and

be

vera

ge

Outs

tand

ing

bala

nce

at

the

end

of th

e ac

coun

ting

perio

d

0.88

0.00

0.25 -

•M

eal e

xpen

ses

for

the

Com

pany

’s c

usto

mer

s an

d th

e m

eal p

rices

wer

e at

the

sam

e ra

tes

appl

icab

le to

oth

er c

usto

mer

s of

JPR

M.

•Au

dit C

omm

ittee

’s O

pini

on

Mea

ls fo

r the

Com

pany

’s cu

stom

ers w

ere

paid

by t

he C

ompa

ny fo

r its

ow

n be

nefit

s and

the

pric

es

char

ged

by JP

RM w

ere

at th

e sa

me

rate

s ap

plic

able

to o

ther

cus

tom

ers

of JP

RM. T

hus,

the

Audi

t Co

mm

ittee

vie

wed

that

the

trans

actio

ns w

ere

reas

onab

le a

nd in

the

norm

al c

ours

e of

bus

ines

s.

3.

Pass

akor

nnat

ee

Co.,

Ltd.

(PAS

)H

otel

ac

com

mod

atio

n ex

pens

es

Outs

tand

ing

bala

nce

at

the

end

of th

e ac

coun

ting

perio

d

0.37 -

0.46 -

•Ex

pens

es o

n ho

tel a

ccom

mod

atio

n pa

id to

PAS

whi

ch o

pera

tes

Villa

Mar

oc R

esor

t in

Pran

buri

for r

oom

rent

als

unde

r its

PR

even

ts s

uch

as th

ank-

you

parti

es fo

r mem

bers

of t

he m

edia

.

•Sp

ecia

l dis

coun

t of a

roun

d 50

% w

as o

ffere

d.

•Au

dit C

omm

ittee

’s O

pini

on

The

Audi

t Co

mm

ittee

vie

wed

tha

t th

e tra

nsac

tions

wer

e be

nefic

ial t

o th

e Co

mpa

ny g

iven

th

e sp

ecia

l dis

coun

t of 5

0% o

ffere

d to

the

Com

pany

for i

ts P

R ev

ents

. The

tran

sact

ions

wer

e co

nsid

ered

ben

efic

ial,

reas

onab

le a

nd in

the

norm

al c

ours

e of

bus

ines

s.

ANNUAL REPORT 2014

119

Rela

ted

Party

Tran

sact

ion

Tran

sact

ion

Valu

e (M

B)N

eces

sity

and

Rat

iona

le20

1320

14

4.

Kin

Kub

Tan

Co.,

Ltd.

(K

IN)

Begi

nnin

g ba

lanc

eIn

crea

se d

urin

g th

e pe

riod

(Dec

reas

e) d

urin

g th

e pe

riod

Outs

tand

ing

bala

nce

at th

e en

d of

the

acco

untin

g pe

riod

Inte

rest

exp

ense

sOu

tsta

ndin

g ba

lanc

e at

the

end

of th

e ac

coun

ting

perio

d

30.0

0-

(30.00

)- 0.14 -

- - - - - -

•On

28

Dece

mbe

r 20

12, t

he C

ompa

ny s

ough

t uns

ecur

ed, c

alla

ble

P/N

cre

dits

from

KIN

. Th

e de

bts

wer

e fu

lly s

ettle

d in

Feb

ruar

y 20

13.

•In

tere

st ra

te w

as 4

% p

.a.

•Au

dit C

omm

ittee

’s O

pini

onTh

e Au

dit

Com

mitt

ee v

iew

ed t

hat

the

tran

sact

ions

wer

e be

nefic

ial

to t

he C

ompa

ny.

The

cred

its re

sulte

d in

the

Com

pany

’s e

xtra

liqu

idity

and

wer

e us

ed a

s w

orki

ng c

apita

l. Th

e in

tere

st r

ate

of 4

% p

.a. w

as lo

wer

tha

n ba

nks’

rat

es. T

hus,

the

Aud

it Co

mm

ittee

co

nclu

ded

that

the

trans

actio

ns w

ere

reas

onab

le a

nd in

the

norm

al c

ours

e of

bus

ines

s op

erat

ions

.

Proc

eeds

from

sa

le o

f ass

et a

nd

raw

mat

eria

ls/

inve

ntor

ies

(div

estm

ent o

f foo

d bu

sine

ss)

Outs

tand

ing

bala

nce

at th

e en

d of

the

acco

untin

g pe

riod

94.9

3

-

- -

•As

food

bus

ines

s co

mpr

ises

a s

mal

l pro

porti

on o

f the

Com

pany

’s re

venu

e an

d ne

t pro

fits,

co

mpa

red

to b

ever

age

busi

ness

, th

e Co

mpa

ny s

old

its f

ood

busi

ness

to

KIN

at

Baht

94

.79

mill

ion

and

trans

ferr

ed th

e as

sets

(onl

y op

erat

ing

asse

ts o

f the

food

bus

ines

s) o

n 1

Janu

ary

2013

. How

ever

, the

Com

pany

did

not

sel

l or t

rans

fer o

ther

ass

ets

and

liabi

litie

s of

the

food

bus

ines

s du

e to

cer

tain

lega

l obl

igat

ions

. The

tran

sfer

of t

he re

mai

ning

ass

ets

and

liabi

litie

s w

as s

ubje

ct to

con

sent

from

all

busi

ness

par

tner

s. H

owev

er, t

he C

ompa

ny

rece

ived

and

pai

d fo

r all

of th

e re

mai

ning

ass

ets

and

liabi

litie

s in

the

first

qua

rter o

f 201

3.•

The

asse

ts s

old

to K

IN w

ere

equi

pmen

t, fu

rnitu

re a

nd fi

xtur

es a

t the

rest

aura

nts

(Mel

t Me

and

Toki

ya) a

nd th

e ce

ntra

l kitc

hen

as w

ell a

s ra

w m

ater

ials

and

inve

ntor

ies

acco

rdin

g to

sa

le a

nd p

urch

ase

agre

emen

t dat

ed 2

8 De

cem

ber 2

012

betw

een

the

Com

pany

and

KIN

in

a d

eal w

orth

Bah

t 94.

79 m

illio

n (e

xclu

sive

of V

AT a

nd w

ithho

ldin

g ta

x).

•Ite

ms

sold

to

KIN

, in

addi

tion

to it

ems

unde

r th

e sa

id s

ale

and

purc

hase

agr

eem

ent,

incl

uded

the

empl

oyee

uni

form

s w

orth

Bah

t 0.1

4 m

illio

n, th

us in

crea

sing

the

deal

val

ue

to B

aht 9

4.93

mill

ion

in to

tal.

The

Com

pany

reco

rded

the

net p

rofit

of B

aht 6

6,69

9.50

from

th

e de

al.

•Au

dit C

omm

ittee

’s O

pini

onSi

nce

the

Com

pany

’s m

ain

obje

ctiv

e is

to o

pera

te b

ever

age

busi

ness

and

the

reve

nue

and

net p

rofit

from

the

food

bus

ines

s co

mpr

ised

a s

mal

l pro

porti

on, c

ompa

red

to it

s be

vera

ge

busi

ness

, the

Com

pany

sol

d its

food

bus

ines

s to

KIN

. The

Aud

it Co

mm

ittee

vie

wed

that

th

e tra

nsac

tions

wer

e re

ason

able

and

in th

e no

rmal

cou

rse

of b

usin

ess

oper

atio

ns.

120

Rela

ted

Party

Tran

sact

ion

Tran

sact

ion

Valu

e (M

B)N

eces

sity

and

Rat

iona

le20

1320

14

4.

Kin

Kub

Tan

Co.,

Ltd.

(K

IN) (

Cont

.)

Food

and

be

vera

ge

Outs

tand

ing

bala

nce

at

the

end

of th

e ac

coun

ting

perio

d

0.96

0.05

0.18

0.03

•M

eals

at K

IN fo

r cus

tom

ers

of th

e Co

mpa

ny.

•Th

e m

eals

wer

e ch

arge

d at

the

norm

al ra

te a

pplie

d to

oth

er c

usto

mer

s of

KIN

.

•Au

dit C

omm

ittee

’s O

pini

on

Mea

ls fo

r the

Com

pany

’s c

usto

mer

s w

ere

paid

by

the

Com

pany

for i

ts o

wn

bene

fits

and

the

pric

es c

harg

ed b

y KI

N w

ere

at th

e sa

me

rate

s ap

plic

able

to o

ther

cus

tom

ers

of K

IN. T

hus,

th

e Au

dit C

omm

ittee

vie

wed

that

the

trans

actio

ns w

ere

reas

onab

le a

nd in

the

norm

al c

ours

e of

bus

ines

s.

Raw

mat

eria

ls

and

equi

pmen

t

Outs

tand

ing

bala

nce

at

the

end

of th

e ac

coun

ting

perio

d

- -

0.43 -

•Pu

rcha

se o

f ice

cre

am a

nd e

quip

men

t for

the

sale

of i

ce c

ream

at T

an L

and,

Roj

ana

Indu

stria

l Pa

rk.

•Th

e tra

nsac

tions

wer

e at

cos

t pric

es.

•Au

dit C

omm

ittee

’s O

pini

on

The

Audi

t Co

mm

ittee

vie

wed

tha

t th

e tr

ansa

ctio

ns w

ere

reas

onab

le a

nd b

enef

icia

l to

th

e Co

mpa

ny b

ecau

se th

e ic

e cr

eam

pro

duct

s w

ere

sold

to g

ener

al c

usto

mer

s at

a p

rofit

.

5.

Tan

Asse

t Co

., Lt

d.

(TAN

)

Expe

nses

on

book

pur

chas

e

Outs

tand

ing

bala

nce

at

the

end

of th

e ac

coun

ting

perio

d

0.20

0.20

0.23

0.21

•Pu

rcha

se o

f the

boo

ks ti

tled

“Wi T

hee

Mai

Tan

” an

d “K

am T

an”

from

TAN

as

gifts

and

goo

ds fo

r sa

le a

t Mel

t Me

shop

s an

d Ta

n La

nd, R

ojan

a In

dust

rial P

ark.

•Th

e tra

nsac

tions

wer

e at

cos

t pric

es.

•Au

dit C

omm

ittee

’s O

pini

on

The

Audi

t Co

mm

ittee

vie

wed

tha

t th

e tr

ansa

ctio

ns w

ere

reas

onab

le a

nd b

enef

icia

l to

th

e Co

mpa

ny b

ecau

se t

he g

ifts

help

ed p

rom

ote

the

Com

pany

and

the

boo

ks w

ere

sold

to

the

Com

pany

at c

ost p

rices

.

ANNUAL REPORT 2014

121

Rela

ted

Party

Tran

sact

ion

Tran

sact

ion

Valu

e (M

B)N

eces

sity

and

Rat

iona

le20

1320

14

5.

Tan

Asse

t Co

., Lt

d.

(TAN

)

Billb

oard

rent

al

expe

nses

Ou

tsta

ndin

g ba

lanc

e at

th

e en

d of

the

acco

untin

g pe

riod

- -

0.24

0.03

•Pr

omot

ion

of th

e Co

mpa

ny’s

bra

nds

in a

ccor

danc

e w

ith th

e m

arke

ting

plan

.

•Th

e bi

llboa

rd re

ntal

was

40%

dis

coun

ted.

•Au

dit C

omm

ittee

’s O

pini

on

The

Audi

t Co

mm

ittee

opi

ned

that

the

bill

boar

d ad

vert

isem

ents

con

trib

uted

to

bran

d co

mm

unic

atio

n an

d pr

omot

ion.

The

tra

nsac

tions

wer

e in

the

nor

mal

cou

rse

of b

usin

ess

oper

atio

n an

d w

ere

at a

dis

coun

ted.

Thu

s, it

was

conc

lude

d th

at th

e tra

nsac

tions

wer

e be

nefic

ial

to th

e Co

mpa

ny a

nd re

ason

able

.

6.

Ezili

Co.

, Ltd

. (E

ZL)

Ente

rtain

men

t ex

pens

es

Outs

tand

ing

bala

nce

at

the

end

of th

e ac

coun

ting

perio

d

0.02 -

0.02 -

•Ex

pens

es o

n m

eals

at E

ZL fo

r th

e Co

mpa

ny’s

cus

tom

ers

whi

ch w

ere

char

ged

at th

e sa

me

rate

s ap

plic

able

to o

ther

cus

tom

ers

of E

ZL.

•Au

dit C

omm

ittee

’s O

pini

on

The

Audi

t Com

mitt

ee v

iew

ed th

at th

e tra

nsac

tions

wer

e at

the

sam

e ra

tes

appl

icab

le to

oth

er

cust

omer

s of

EZL

and

thus

wer

e re

ason

able

and

in th

e no

rmal

cou

rse

of b

usin

ess

oper

atio

ns.

7.

Kin

Rong

De

um C

o.,

Ltd.

(K

RD)

Ente

rtain

men

t ex

pens

es

Outs

tand

ing

bala

nce

at

the

end

of th

e ac

coun

ting

perio

d

- -

0.12 -

•M

eals

at K

RD fo

r the

Com

pany

’s c

usto

mer

s.

•Th

e tra

nsac

tions

wer

e ch

arge

d at

the

sam

e ra

tes

appl

icab

le to

oth

er c

usto

mer

s of

KRD

.

•Au

dit C

omm

ittee

’s O

pini

on

Mea

ls fo

r the

Com

pany

’s c

usto

mer

s w

ere

paid

by

the

Com

pany

for i

ts o

wn

bene

fits

and

the

pric

es c

harg

ed b

y KR

D w

ere

at th

e sa

me

rate

s ap

plic

able

to o

ther

cus

tom

ers

of K

RD. T

hus,

th

e Au

dit C

omm

ittee

vie

wed

that

the

trans

actio

ns w

ere

reas

onab

le a

nd in

the

norm

al c

ours

e of

bus

ines

s.

122

Rela

ted

Party

Tran

sact

ion

Tran

sact

ion

Valu

e (M

B)N

eces

sity

and

Rat

iona

le20

1320

14

8.

Tan

Boon

Co

., Lt

d.

(TAN

BOON

)

Hot

el a

ccom

mod

atio

n ex

pens

e

Outs

tand

ing

bala

nce

at th

e en

d of

the

acco

untin

g pe

riod

- -

0.00 -

•Ex

pens

es o

n ho

tel a

ccom

mod

atio

n pa

id to

TAN

BOON

whi

ch o

pera

tes

East

in T

an H

otel

in

Chi

angm

ai fo

r pro

mot

iona

l act

iviti

es o

f the

Com

pany

and

its

cust

omer

s.

•Sp

ecia

l dis

coun

t was

offe

red.

•Au

dit C

omm

ittee

’s O

pini

on

The

Audi

t Com

mitt

ee v

iew

ed th

at th

e tra

nsac

tions

wer

e be

nefic

ial t

o th

e Co

mpa

ny g

iven

th

e sp

ecia

l dis

coun

t offe

red

to th

e Co

mpa

ny fo

r roo

m re

ntal

s un

der i

ts P

R ev

ents

. The

tra

nsac

tions

wer

e co

nsid

ered

ben

efic

ial,

reas

onab

le a

nd in

the

norm

al co

urse

of b

usin

ess.

9.

Mrs

. Eng

Pa

ssak

ornn

atee

Begi

nnin

g ba

lanc

e

Incr

ease

dur

ing

the

perio

d

(Dec

reas

e) d

urin

g th

e pe

riod

Outs

tand

ing

bala

nce

at th

e en

d of

the

acco

untin

g pe

riod

Inte

rest

exp

ense

s

Outs

tand

ing

bala

nce

at th

e en

d of

the

acco

untin

g pe

riod

750.

00

520.

00

(270

.00)

1,00

0.00

41.9

53.4

0

- - - - - -

•Th

e Co

mpa

ny s

ough

t uns

ecur

ed P

/N c

redi

ts fr

om M

rs. E

ng to

be

repa

id o

n 30

Jun

e 20

15.

•In

201

2, th

e in

tere

st ra

te w

as 5

% p

.a. a

nd c

hang

ed to

4%

p.a

. fro

m Q

2/20

13 o

nwar

ds. T

he

inte

rest

rate

will

be

revi

ewed

qua

rterly

.

•Au

dit C

omm

ittee

’s O

pini

on

The

Audi

t Com

mitt

ee v

iew

ed th

at th

e tra

nsac

tions

wer

e be

nefic

ial t

o th

e Co

mpa

ny. T

he

cred

its re

sulte

d in

the

Com

pany

’s e

xtra

liqu

idity

and

wer

e us

ed a

s w

orki

ng c

apita

l. Th

e in

tere

st ra

te o

f 4%

p.a

. was

low

er th

an b

anks

’ rat

es. T

hus,

the

Audi

t Com

mitt

ee co

nclu

ded

that

the

trans

actio

ns w

ere

reas

onab

le a

nd in

the

norm

al c

ours

e of

bus

ines

s op

erat

ions

.

ANNUAL REPORT 2014

123

Necessity and Reasonableness of TransactionRelated-party transactions are carefully executed for the best interest of the Company and its shareholders. All related-party transactions and transactions with conflicts of interest are in the Company’s normal business operations, reasonable and necessary for the Company’s normal business. Terms and conditions of such transactions are at an arm’s length basis and comparable to the markets or other similar customers. Credit transactions between the Company and its related parties are executed only when necessary for extra liquidity of the Company.

Related-Party Transaction Approval ProcedureThe Company’s decisions to approve related-party transactions are primarily based on the Company’s interest. Such transactions were escalated to relevant authorities, i.e. the Audit Committee, the Board of Directors and the Company’s senior executives, in accordance with applicable approval procedures to ensure that implications and pricing of the transactions are appropriate and at an arm’s length basis.

The Company has obtained approval for the guiding principles for transactions at an arm’s length between the Company and its directors, executives and related parties. According to the approved principles, the Company may enter into related-party transactions, subject to the approval by the management team, if the transactions have the same commercial terms and those an ordinary persons would agree with another party under similar circumstances and on the basis of commercial negotiation which is not influenced by their status as director, executive or related party. The related-party transaction report is presented to the Audit Committee on a quarterly basis.

Directors, members of the Executive Committee and persons with potential conflict of interest do not have the authority to approve transactions concerned in order to comply with the requirements and rules stipulated by the SEC and/or the SET.

Any related-party transactions which are beyond the scope of expertise of the Audit Committee shall be escalated to independent experts for opinions to support the consideration of and decision on such transactions by the Board, the Audit Committee or shareholders as applicable.

Material related-party transactions are disclosed under the notes to the financial statements which have been audited by the Company’s auditor.

Related-Party Transaction Policy and Future TrendIt is the Company’s policy that all related-party transactions during the present time and in the future must be on an arm’s length basis, reviewed in accordance with the corporate governance principles, the Company’s rules and approved by relevant authorities as specified in 3) above to promote transparency and fairness.

124

Summary of Key Contract/Agreement

1. Distributor Agreement

On 20 June 2014, the Company entered into a distributor agreement with I Am Green Tea Co., Ltd. (IGT) to appoint IGT as the Company’s distributor. The agreement is valid from 1 July 2014 to 30 June 2017.

Parties to Agreement : I Am Green Tea Co., Ltd (“the distributor”) and the Company (“the manufacturer”)

Date of Agreement : 20 June 2014

Effective Date : 1 July 2014

Validity Period : 3 years (1 July 2014 – 30 June 2017)

Territory : The manufacturer agrees that the distributor can distribute its beverage products in Thailand according to the agreed terms and conditions through all channels, except for the modern trade channel.

Pricing and Payment Terms : The distributors must purchase products from the manufacturer at the selling prices determined by the manufacturer as of the date such products are sold to customers. The manufacturer will issue invoices at the selling prices indicated in the agreement. The distributor shall sell products to shops and merchants according to the pricing structure specified by the manufacturer in the agreement.

Distribution Center and Delivery of Goods to Distribution Center

: The distributor shall ensure that it has sufficient warehouse space for storage of the products delivered to the distributor by the manufacturer.

: The manufacturer shall deliver products to distribution centers as specified in the 30-day advance notice of the distributor. The delivery costs and expenses shall be borne by the manufacturer.

Product Ownership : Products stored at distribution centers are owned by the distributor.

Marketing and Promotion Expenses

: The expenses shall be borne by the manufacturer.

Expenses on Product Recall : Recall caused by the manufacturer’s error: The manufacturer shall be responsible for the costs and expenses associated with the recall of defective products.

: Recall caused by product defects: The manufacturer agrees to be responsible for and pay compensation to the distributor at the agreed prices.

: Recall caused by the distributor’s error: The manufacturer shall not be responsible for such recall.

Agreement Cancellation : The agreement cancellation may be initiated on a reasonable ground in the following circumstances by a party to the agreement which does not breach the agreement:

ANNUAL REPORT 2014

125

1) Either party to the agreement is in solvency, bankruptcy, business dissolution or liquidation.

2) Either party to the agreement breaches this agreement or fails to honor obligations under this agreement within 30 days from the receipt of notice thereof from another party.

Responsibility for Damage Caused by Unsafe Product

: The manufacturer must provide clear and sufficient usage and care instructions, warnings and production information. The manufacturer shall be solely responsible for damage caused by unsafe products and protect the distributor from damage associated with claims, litigation, accusation and fine penalties caused by unsafe products.

Confidentiality : Confidential information shall continue to be protected 3 years following the agreement termination or cancellation.

2. License Agreement for Production and Distribution of Products with Mr. Tan Passakornnatee’s Pictures, Drawings, Symbols and Work of Design

Parties to Agreement : Mr. Tan Passakornnatee (“the licensor” or “Mr. Tan”) and I Am Green Tea Co., Ltd (“the licensee”) (formerly Ichitan Trading Co., Ltd.)

Date of Agreement : 1 July 2011

Effective Date : 1 July 2011

Validity Period : 5 years (1 July 2011 – 30 June 2016)

License Fee : Waiver of fees and charges for the licensee under this agreement.

Manufacturing and Distribution of Product

: The figurine and goods with pictures, symbol or works of design of the licensors must be manufactured by the licensee or a manufacturer hired by the licensee for products which are suitable with such figurine or goods at the licensee’s expense.

Selling Price : The licensor reserves the right to determine the prices of such goods whereas the licensee is authorized to mark up the prices by 10% at a maximum as management fee.

Duty of Licensee : The licensee does not have the right to transfer or assign its rights and obligations under this agreement, either partially or entirely, to a third party unless otherwise permitted in writing by the licensor.

Agreement Cancellation : Where the licensee breaches any provision under this agreement or attempts to exploit rights under this agreement for any purpose other than those stated in this agreement, the licensor shall have the right to immediately cancel this agreement by submitting a written to notice via registered mail. Upon the termination of this agreement due to any cause whatsoever, the rights granted to the licensee under this agreement shall be terminated and void.

126

Nam

eTh

e Co

mpa

nyRe

late

d Co

mpa

nies

12

34

56

78

910

1112

1314

1516

1718

1920

2122

2324

2526

2728

2930

3132

33

Mr.

Tan

Pass

akor

nnat

eeC,

CEO

, MD

DD

DD

DD

DD

DD

DD

Mrs

. Eng

Pas

sako

rnna

tee

D, E

D, M

DD

DD

DD

DD

DD

DD

DD

DD

DD

DD

DD

DD

DD

Mr.

Chiu

Yue

h-Ch

inD,

MD

D

Mis

s. Ar

aya P

anic

haya

non

D, E

DD

D

Mr.

Pree

cha

Aug

char

anon

daED

, M

Mr.

Viro

j Sup

asoo

nD,

ED,

M

Mr.

Tana

pan

Khon

gnun

tha

D, E

D, M

AVM

. Nat

haw

at

Nim

mol

than

akho

rnID

, //

Mr.

Pras

an L

impi

pata

naku

lID

, AC

Mr.

Issa

rach

ai D

echa

ritID

, AC

DD

DD

DD

Rem

ark:

C

= Ch

airm

an D

= D

irect

or I

D =

Inde

pend

ent D

irect

or //

= C

hairm

an o

f the

Aud

it Co

mm

ittee

AC

= Au

dit C

omm

ittee

CEO

= C

HAI

RMAN

OF

EXEC

UTIV

E CO

MM

ITTE

E ED

= E

xecu

tive

Dire

ctor

M

D =

Man

agin

g Di

rect

or

M =

Man

agem

ent

Lis

t of c

ompa

nies

1 =

Eng

And

Eng

Srira

cha

Asse

t Co.

,Ltd

.10

= P

assa

korn

nate

e Co

.,Ltd

.19

= A

CAP

Corp

orat

e Se

rvic

es C

o.,L

td28

= W

hite

Mar

ry S

tudi

o Co

.,Ltd

.

2 =

Tan

And

Tan

Srira

cha

Asse

t Co.

,Ltd

.11

= Ic

hi P

ang

Co.,L

td.

20 =

Tha

nk Y

ou S

ervi

ce C

o.,L

td.

29 =

Bel

oved

Stu

dio

Co.,L

td.

3 =

Eng

Tan

Asse

t Co.

,Ltd

.12

= L

opbu

ri In

n Pl

aza

Co.,L

td.

21 =

T.Y

. Mar

riage

Stu

dio

Co.,L

td.

30 =

Mar

ry M

e W

eddi

ng S

tudi

o Co

.,Ltd

.

4 =

Tan

Boon

Co.

,Ltd

. 13

= W

eddi

ng B

usin

ess

Cons

ulta

nt C

o.,L

td.

22 =

Tok

iya

Co.,L

td.

31 =

Mu

Tiar

e W

eddi

nd G

own

& P

lann

er C

o.,L

td.

5 =

Japa

nese

Prim

e Re

stau

rant

s M

anag

emen

t Co.

,Ltd

.14

= C

apita

l OK

Co.,L

td.

23 =

My

Mem

ory

Stud

io C

o.,L

td.

32 =

Kin

Kab

Tan

Co.

,Ltd

.

6 =

DST

Asse

t Co.

,Ltd

.15

= P

rofe

ssio

nal C

olle

ctio

n Co

.,Ltd

.24

= Y

our S

tudi

o Co

.,Ltd

.33

= T

an E

ng A

sset

Co.

,Ltd

.

7 =

Tan

And

Tan

Asse

t Co.

,Ltd

.17

= A

CAP

ADVI

SORY

PLC

.25

= M

oder

n W

eddi

ng S

tudi

o Co

.,Ltd

.

8 =

Deaw

Dea

w K

ab T

an C

o.,L

td.

17 =

Aca

p Co

nsul

ting

Co.,L

td.

26 =

Vict

oria

’s W

eddi

ng P

rofe

ssio

nal C

o.,L

td.

9 =

Glua

y Gl

uay

Co.,L

td.

18 =

Glo

bal S

ervi

ce C

ente

r Co.

, Ltd

.27

= T

he C

lass

ic S

tudi

o Co

.,Ltd

.

Deta

ils o

f offic

e of

dire

ctor

s and

exe

cutiv

e of

ficer

s of t

he C

ompa

ny. I

n su

bsid

iaries

and

rela

ted

com

pani

es

ANNUAL REPORT 2014

127

Management Discussion and Analysis

Analysis of Operating ResultsRevenue

In 2012-2014, the Company recorded the revenues of Baht 4,482.9 million, Baht 6,531.8 million and Baht 6,208.9 million respectively, while the sales revenues were Baht 3,906.8 million, Baht 6,484.4 million and Baht 6,179.1 million. The YOY growth rates of 2012-2014 were 269.7%, 66.0% and (4.7)%, respectively.

In 2014, the sales revenue of the Company declined by 4.7% from the previous year due to the prolonged cool weather which continued into the first 2 months of the year and the subdued ready-to-drink tea market.

The 2011 sales performance reflected the adverse impact of the great flood. However, the Company’s factory resumed normal production in 2012 and the Company introduced new 7 flavors to the market and launched aggressive promotional campaigns to increase our market share. In addition, the brand recognition of Ichitan started to gain ground among the public and our distribution network was expanded and strengthened. In early 2013, the Company launched Yen Yen product which received good feedback from customers and greatly contributed to our rapid market share growth.

In 2011-2013, sales revenues were mainly from Ichitan green tea product before herbal drink products started to general sales revenue in 2014. Percentage of sales from modern trade and traditional trade was nearly equal.

In 2014, sales revenues were from ready-to-drink tea and the Company launched Ichitan Selected, a low sugar tea drink product, Ichitan Dragon Black Tea (mulberry flavor), and Yen Yen by Ichitan, a honey-mixed chrysanthemum drink.

Other revenues included FX gains from machinery imports which stood at Baht 52.8 million, Baht 41.0 million and Baht 8.3 million in 2012-2014 respectively. In 2014, the Company additionally recorded the interest income of Baht 9.4 million and the marketing fee of Baht 8.0 million.

Revenue Structure 2012 2013 2014

MB % MB % MB %

Net sales revenue 3,906.8 87.1% 6,484.4 99.3% 6,179.1 99.5%

Net revenue from flood 518.8 11.6% - - - -

Other revenue 57.3 1.3% 47.5 0.7% 29.8 0.5%

Total revenue 4,482.9 100.0% 6,531.8 100.0% 6,208.9 100.0%

Sales growth 269.7% 66.0% (4.7%)

Market share* 27.1% 42.1% 43.8%

No. of flavors 16 รสชาติ 17 รสชาติ 19 รสชาติ

Source: * Retail Index of Nielsen, January 2014

128

Cost of Sales

In 2012-2014, the cost of sales was primarily from raw materials and supplies which accounted for 90% of the total cost of goods sold.

Cost of Sales 2012 2013 2014

MB % MB % MB %

Raw materials, supplies and changes in inventories of finished goods

2,504.3 87.4% 3,766.5 85.1% 3,235.3 79.6%

Depreciation and amortization 133.1 4.6% 256.2 5.8% 358.5 8.8%

Utility expenses (fuel, gas, electricity and water)

79.1 2.8% 161.6 3.6% 203.9 5.0%

Transportation cost 46.0 1.6% 61.6 1.4% 43.7 1.1%

Employee expenses 42.8 1.5% 76.0 1.7% 102.8 2.5%

Share-based payment 14.4 0.5% 2.9 0.1% - -

Other 46.5 1.6% 100.7 2.3% 121.0 3.0%

Total 2,866.1 100.0% 4,425.0 100.0% 4,065.2 100%

Sales revenue (MB) 3,906.8 6,484.4 6,179.1

Gross profit margin (%) 26.6% 31.8% 34.2%

In 2012 – 2014, the Company’s gross profit margins of beverage business were 26.6%, 31.8% and 34.2%, respectively. The 2012 gross profit margin was rather low because the in-house production line was not fully operational and the Company had to outsource 47% of its production activities to OEM, hence the higher unit cost and lower gross profit margin. In 2014, the Company’s production capacity increased and thus it gradually reduced dependency on OEM to 9% of the total production volume. This contributed to the Company’s improved performance in terms of unit cost and gross profit margin as evident in the 2014 gross profit margin which increased to 34.2% from the same period of the previous year as a result of a new production line for bottle type which started operation in April 2014, coupled with the decrease in the OEM to 9% of the total production volume. The use of OEM was expected to continuously decline, especially following the completion of construction and machinery installation under phase 2 of the production capacity increase project in April 2015.

Share-based payment resulted from the personal share purchase and sale agreement between a major shareholder and employees of Ichitan and the stock option offered by a major shareholder to a group of business partners at par value. Such transactions were classified and recorded as share-based payment transactions and were subject to the fair valuation.

ANNUAL REPORT 2014

129

Share-Based Payment 2012 2013 2014

Share-based payment (employee) – Cost of sales 14.4 2.9 -

Share-based payment (employee) – Administrative expense

5.9 6.6 -

Share-based payment (business partner) – Administrative expense

23.0 3.2 -

Total 43.3 12.8 -

Selling Expenses Major selling expenses primarily include advertisement and promotional expenses. The selling expenses were Baht 531.5 million in 2012, Baht 931.2 million in 2013 and Baht 774.2 million in 2014 and the ratios of selling expenses to sales revenue in each of the aforesaid years were 13.6%, 14.4% and 12.5%, respectively. The decline was attributed to the Company’s plan to strictly control marketing and promotional expenses within the level of 14% of the sales revenue through cost-effective and efficient marketing tools. The management has reviewed the marketing and promotional strategies every quarter to ensure that they are appropriate for the prevailing market conditions. In 2014, selling expenses amounted to Baht 774.2 million, accounting for 12.5% of the sales revenue, decreasing from 14.4% of the previous year because the Company organize only 1 major promotional event in 2014 and strictly curbed its selling expenses.

Administrative Expense In 2012-2014, administrative expenses mainly included expenses on staff, education, sports and charities which altogether accounted for approximately 65.0% of the total administrative expenses. The administrative expenses were Baht 134.9 million in 2012, Baht 130.3 million in 2013 and Baht 250.4 million in 2014. In 2014, administrative expenses totaled Baht 250.4 million, increasing Baht 120.1 million or 92.1% from the previous year mainly due to the recognition of the impairment loss worth Baht 121.5 million for the trademark right, divided into Baht 84.1 million in the “intangible asset” account and Baht 37.4 million in the “advance payment for trademark right” account. As of 31 December 2014, the Company registered the transfer of trademarks in 10 countries (Thailand, Cambodia, India, Myanmar, the Philippines, Singapore, Hong Kong, South Korea, Taiwan and Vietnam) which were recognized as intangible assets with the total value (before tax) of Baht 168.22 million. Trademarks in 4 countries (China, Malaysia, USA and Canada) are still pending the ownership transfer registration and were recorded as advance payment for trademark right of Baht 37.38 million (before tax). However, the Company has not yet finalized its plan to sell “Bireley’s” products in these countries, except for Thailand, and thus a realistic cash inflow projection associated with such products cannot yet be made. In this connection, to comply with the Accounting Standard No. 36 on Impairment of Assets and the Accounting Standard No. 38 on Intangible Assets which stipulate that an impairment test must be performed annually for intangible assets with indefinite useful life to identify their recoverable amount at the same time every year, the Company has set aside the impairment allowance totaling Baht 121.49 million for the year ended 2014.

130

Profit (Loss) Before Financing Cost and Income Tax If the impact of the great flood and the performance of businesses halted is not factored in, the Company’s profit before financing cost and income tax stood at Baht 431.6 million in 2012 and Baht 1,045.3 million in 2013, or 9.6% and 15.4% of the total revenues in 2012 and 2013 respectively. The Company’s factory commenced operation in March 2012 with 1 production line for bottle type and 1 production line for box type. The production capacity was increased in the third quarter of 2012 to 2 production lines for bottle type and 2 production lines for box type. The production capacity increase coupled with the reduction in OEM production contributed to lower unit cost and higher profit margin.

In 2014, the Company’s profit before financing cost and income tax was Baht 1,119.1 million, accounting for 18.0% of the total revenue and Baht 73.8 million higher than the same period of the previous year. The growth was attributed to a new production line for bottle type in April 2014, the “Ruay Prieng 3” promotional campaign launched in March 2014, and the launch of a new product, Yen Yen, a honey-mixed chrysanthemum drink, in August which received good response from consumers.

Comprehensive Profit (Loss)

The Company’s comprehensive income (loss) was Baht 697.7 million in 2012, Baht 881.7 million in 2013 and Baht 1,061.2 million in 2014, representing the net profit margin ratio of 15.6%, 13.5% and 17.1% respectively. The operating profit margins of 2012-2014 were 6.8%, 13.5% and 17.5% of the total revenue.

Analysis of Financial Position Asset – Continuing Operation

As of 31 December of 2012-2014, the Company’s total assets stood at Baht 5,371.0 million, Baht 6,540.9 million and Baht 9,026.2 million, respectively. As the Company operates beverage production and distribution businesses, its core assets include machinery, factory equipment, land and buildings which altogether account for 75.3% of the total assets as of 21 December 2014.

In the previous year, the Company saw growth in its total assets due to its capacity increase initiatives, driven by its expansion into overseas markets and OEM reduction and, including the increase in current assets on the back of business growth, and the IPO launch. Key transactions which contributed to the asset growth of Baht 2,485.2 million were:

1. Net increase of Baht 1,813.3 million in property, plant and equipment, mainly from machinery investment in the production line for bottle type.

2. Increase of Baht 100.7 million in accounts receivable on the back of business growth. The Company recorded the sales growth of 66.0% in 2013 and (4.7)% in 2014. Our credit term is 30-45 days while the average collection period ranges from 32-50 days, i.e.32 days in 2012, 36 days in 2013 and 50 days in 2014. The average collection period of 2014 was longer than that of 2013 because the collection period was extended for a key distributor in accordance with the terms and conditions under a distribution agreement.

ANNUAL REPORT 2014

131

Major accounts receivable of the Company are distributors who are granted the credit term of 30-45 days. Details of accounts receivable as of the end of 2012-2014

Aging 2012* 2013 2014

MB % MB % MB %

Related Party

Undue 5.1 1.1% 206.9 25.6% 38.2 4.2%

Overdue

• Less than 3 months 1.1 0.2% - - - -

• Longer than 6 months 0.0 0.0% - - - -

Total 6.2 1.3% 206.9 25.6% 38.2 4.2%

Third Party

Undue 444.2 95.6% 602.0 74.4% 870.7 95.7%

• Overdue

• Less than 3 months 14.4 3.1% 0.1 .0% 0.7 0.1%

• Longer than 6 months 0.0 0.0% - - - -

Total 458.6 98.7% 602.0 74.4% 871.4 95.8%

Grand Total 464.8 100.0% 809.0 100.0% 909.6 100.0%Remark: * Accounts receivable of 2012 included accounts receivable worth Baht 4.8 million from discontinued business (food business)

3. Increase of Baht 337.5 million in inventories in line with the business growth. The Company adopts the 30-day policy for its inventory stocking. The inventory turnover rates were 15.8x in 2012, 17.0x in 2013 and 13.3x in 2014 while the average holding periods in 2012-2014 were 23 days, 21 days and 27 days, respectively.

The return on assets declined to 15.0% in 2013 and 14.0% in 2014 and the return on fixed assets decreased from 25.8% in 2013 to 24.6% in 2014 due to extra machinery investment in phase 2 of the capacity increase project which is partially pending installation and not operative in 2014. The machinery installation will be fully completed in the second quarter of 2015.

Liability – Continuing Operation

As of 31 December of 2012-2014, the Company’s liabilities totaled Baht 4,224.0 million, Baht 4,572.6 million and Baht 2,813.3 million, respectively, most of which are bank loans. The outstanding of bank loans as of 31 December 2014 amounted to Baht 1,962.5 million.

Long-term bank loans by maturity:

– Loans due for repayment in 1 year: Baht 182.0 million.

– oans due for repayment in 1-5 years: Baht 1,672.7 million.

– Loan due for repayment in 5 years and longer: Baht 107.8 million.

132

Financing Structure

The Company’s major source of funds of are bank loans and director loans. As of 31 December 2013 and 31 December 2014, the debt to equity ratios of continuing business of the Company stood at 2.3x and 0.5x respectively. The debt to equity ratios of the Company computed according to the requirements of lending banks (where equity includes loans from directors and related companies and debts excludes the same) were 1.2x as of 31 December 2013 and 0.5x as of 31 December 2014. The debt to equity ratios met the lending banks’ financial covenant requirement which stipulates that the Company’s debt to equity ratio must not exceed 2.5x. The debt to equity ratio of 2014 improved as a result of the repayment of director loans and bank loans in April 2014 from IPO proceeds.

Liabilities and Contingencies as of 31 December 2014

– Capital commitment worth Baht 307.7 million from the acquisition of properties, plants and equipment.

– Operating lease commitment worth Baht 19.5 million from the office building and facilities lease agreements of which terms range from 1-4 years and end in 2014-2016.

– Commitment worth Baht 369.3 million according to the undrawn L/C facilities.

– Commitment worth Baht 57.3 million under purchase orders agreed with suppliers of goods and materials.

– Commitment worth Baht 5.5 million under guarantee issued by a bank to a state enterprise.

Shareholders’ Equity

As of 31 December 2014, the shareholders’ equity was worth Baht 6,212.9 million, divided in the paid-up registered capital of Baht 1,300 million, the premium on ordinary shares of Baht 3,515.4 million, the surplus on share-based payment of Baht 56.1 million, the legal reserve of Baht 130.0 million and the retained earnings of 1,211 million.

In 2013, the shareholders’ equity was worth Baht 1,968.3 million, divided in the paid-up registered capital of Baht 1,000 million, the surplus on share-based payment of Baht 56.1 million, the legal reserve of Baht 45.0 million and the retained earnings of Baht 867.2 million. From the inception to this point of time, the Company has never paid dividends to shareholders.

In 2012, the shareholders’ equity was worth Baht 1,073.9 million, up Baht 1,141.0 million from 2011 as a result of the registered capital increase of Baht 400 million. The profit from normal operation of the beverage business was Baht 306.4 million and the remaining insurance claim of Baht 569.4 million was recognized.

The return on equity ratios in 2013 and 2014 were 66.7% and 26.4%, respectively.

Book Value Per Share

As of 31 December 2014, the Company’s book value was Baht 4.62 per share.

ANNUAL REPORT 2014

133

Liquidity Analysis and Source and Use of Fund

In 2014, the Company’s main sources of fund were operating cash flow, bank loan and IPO proceeds.

Operating Cash Flow

In 2014, the Company recorded the operating cash flow of Baht 1,472.8 million from sales and operating profit.

Liquidity Ratio

The Company’s liquidity mainly depended on the efficiency of inventory turnover management, collection of accounts, cash flow from collection of accounts receivable and payment to accounts payable. In 2012-2014, the

Liquidity ratio Unit 2012 2013 2014

Average collection period วัน 31.7 35.2 50.1

Inventory turnover วัน 22.8 21.2 27.0

Account payable turnover วัน 36.3 28.9 35.8

Cash cycle วัน 18.2 27.6 41.3

In 2014, the average collection period lengthened from 35.2 days in 2013 to 50.1 days due to the extension of the collection period for a key trading partner from 30 days to 45 days in accordance with the terms and conditions of applicable agreement. In this regard, the Company requested its raw material suppliers to change the credit terms to 45 days and this led to the longer account payable turnover.

In 2014, the cash cycle increased to 41.3 days from 27.6 days in 2013 as a result of the extension of the collection period for a key distributor. As the average collection period and the account payable turnover were extended by 14.9 days and 6.9 days, respectively, the cash cycle was lengthened by 13.7 days.

Debt Service Coverage Ratio

According to the lending banks’ requirement, the Company must maintain the debt service coverage ratio of at least 1.25x and the debt to equity ratio of 2.5x or lower. As of 31 December 2013 and 2014, the Company’s debt service coverage ratios stood at 3.3x and 5.9x, respectively while its debt to equity ratios were 1.2x and 0.5x, respectively.

Cash Flow from Investing Activity

In 2014, the Company’s net cash flow from investing activity stood at Baht (2,475.2) million. Key investing activities were land acquisition, construction costs, purchase of machinery and equipment, acquisition of trademark rights and investment in jointly-controlled entities.

134

Cash Flow from Financing Activity

In 2014, the Company’s net cash flow from financing activity amounted to Baht 1,070.5 million, primarily from bank loan and IPO proceeds. The said cash flow was used for land acquisition, construction, purchase of machinery and equipment, loan repayment, dividend payment and working capital.

Audit Fee

In 2014, the audit fee paid to KPMG Phoomchai Audit Limited amounted to Baht 1.8 million.

Factor and Influence Potentially Affecting Performance or Financial Position in the Future

Major Factor Affecting the Company’s Performance

1) Major incidents affecting past performance

In 2014, the Company installed a new production line for bottle type which increased its production capacity as of 31 December 2014 to 6 production lines, of which 4 are for bottle type and 2 are for box type.

Launch of new product and market share expansion

Price competition in the beverage market has been rather fierce as there are several players in the market, especially the ready-to-drink market. Most players have adopted aggressive strategy and continuously introduced promotional campaigns to the market. Development of value-added products and product differentiation have been key focus of beverage business operators as evident in the number of new ready-to-drink products which has consistently grown since mid-2012. Therefore, it is vital for the Company to continuously develop new products which can cater to the growing needs and demands of consumer in order to sharpen its competitive edge, protect its market share and prevent against negative impact on its performance.

The Company has formulated a product research and development roadmap and a dynamic sales strategy to effectively respond to changes in the market landscape as well as to attract new customers and retain existing customers which ultimately will lead to our higher market share. In the past 4 years, the Company has introduced 19 products to the market.

2) Sales forecast, production planning and effective cost and expense management

Most of the Company’s production costs are fixed costs, i.e. machinery depreciation and land lease. Given the fact that the unit cost decreases as output increases, the Company needs to forecast its sales performance to optimize the effectiveness of its production planning, raw material procurement and product distribution.

Key factors affecting demand and consumption are weather and promotional activities. The rate of ready-to-drink tea consumption hikes in summer and slows in winter. Therefore, it is imperative for the Company to seasonally adjust its promotional strategy to match the changing demand levels of consumers.

For effective cost and expense management, the Company has applied advanced technology to its production process as well as controlled its production costs. In addition, the Company has reviewed its resource utilization such as staffing and amount of raw material used to ensure cost-effectiveness and determine appropriate unit cost.

135

ANNUAL REPORT 2014

Report of the Audit CommitteeDear Shareholders

The Audit Committee consists 3 independent directors, namely AVM Nathawat Nimmolthanakhorn, as the Chairman of the Audit Committee, Mr. Prasan Limpipatanakul and Mr. Issarachai Decharit. All members of the Audit Committee meet the qualification criteria under the Audit Committee’s charter which has been formulated under the requirements and best practices applicable to audit committees as stipulated by the Securities and Exchange Commission and the Stock Exchange of Thailand.

In 2014, the Audit Committee held 5 meetings and performed duties with independence and in accordance with the scope of authority and responsibilities as summarized below:

• Review of financial reports and disclosures in collaboration with the auditors and the management responsible for quarterly and annual financial reports to ensure the adequacy and adequacy thereof. Review of the Company’s internal control systems jointly with the auditor and the internal auditor team to ensure that the Company’s internal control and internal audit were adequate and appropriate.

• Oversight and evaluation of the internal audit team’s performance in view of the annual internal audit plan and manpower to promote the independence of the internal audit function.

• Nomination of the 2015 auditor of the Company to the Board following the joint review of the auditor’s profile, proven track records and the auditor’s fee in collaboration with the management. Review of the qualifications and independence of the auditors in compliance with applicable requirements of the Securities and Exchange Commission and the Stock Exchange of Thailand. In this regard, the Audit Committee proposed to the Board the nomination of Mrs. Munchupa Singsuksawat from KPMG Phoomchai Audit Limited as the Company’s auditor for 2014 and the auditor’s fee which shall be further proposed to the shareholders’ meeting.

• Oversight of the Company’s compliance with the corporate governance principles, the Securities and Exchange Act, requirements stipulated by the Stock Exchange of Thailand or legal and regulatory requirements applicable to the Company’s business. Review of related-party transactions and potential conflicts of interest to ensure the Company’s proper and reasonable compliance with regulatory requirements and rules for the Company’s best interest as well as the management’s strict compliance with the related-party transaction policies approved by the Board.

• Proposal of the reviewed Audit Committee’s charter to the Board which had been revised according to the changing business environment of the Company. Self-evaluation of the Audit Committee’s performance to identify achievements, issues and areas for improvement of the Audit Committee and other relevant units. Participation in relevant training courses and seminars to enhance knowledge related to roles and responsibilities of audit committees.

The Audit Committee concurs with the auditor that the Company’s 2014 financial statements have been prepared in accordance with applicable financial reporting standards. Disclosures have been adequately made by the Company and its internal control system is satisfactory and presents no material weakness. The Company has complied with applicable statutory and regulatory requirements and the management team has committed to adhering to the principles of integrity and business ethics. The internal audit results have been directly reported by the internal audit team to the Audit Committee and rectifications per the Audit Committee’s recommendations have been regularly monitored.

AVM Nathawat Nimmolthanakhorn

Chairman of the Audit Committee

136

Report of the Nomination and Remuneration CommitteeDear Shareholders

The Nomination and Remuneration Committee of Ichitan Public Company Limited is appointed by the Board Meeting No. 3/2014 dated 13 August 2014 and is comprised of 3 members as follows:

1. Mr. Issarachai Decharit Chairman of Nomination and Remuneration Committee2. Mr. Prasan Limpipatanakul Nomination and Remuneration Committee Member3. Mrs. Eng Passakornnatee Nomination and Remuneration Committee Member

The Nomination and Remuneration Committee has performed duties as assigned by the Board and in accordance with the charter of the Nomination and Remuneration Committee. The key responsibilities of the Nomination and Remuneration Committee include the nomination of qualified candidates as members of the Board and Board Committees and the proposal of remuneration of the Chairman of the Board and the Chief Executive Officer to the Board. In 2014, the Nomination and Remuneration Committee held 2 meetings.

The Nomination and Remuneration Committee has clearly formulated applicable policies, criteria and procedures in accordance with the charters and regulatory requirements to provide appropriate operating frameworks for the Company as approved by the Board as follows:• The nomination of qualified candidates as members of the Board and Board Committees and the Chief Executive

Officer shall be based on qualifications, knowledge, abilities, skills, experiences, expertise, leadership, vision and attitudes. Considerations are also given to the size, structure and composition of the Board to promote the compliance with good corporate governance principles and effective management which are appropriate to the evolving business environment and regulatory changes.

• The determination of remuneration offered to directors and the Chief Executive Officer is based on the scope of responsibilities, duties and performance of the incumbents together with the operating results, business conditions and factors which may affect the Company’s businesses and the economic conditions.

As of 31 December 2014, the Board is comprised of 9 members, of which 3 are independent directors. The Nomination and Remuneration Committee has requested the directors conduct self-evaluation to review their performance in the prior year. Details of the remunerations offered to directors and executives are shown under the remuneration of directors and executives section of the annual report. The Nomination and Remuneration Committee views that the remunerations are appropriate in view of with the scope of responsibilities of the directors and executives and in accordance with the policies and criteria set by the Nomination and Remuneration Committee and approved by the Board.

Mr. Issarachai Decharit

Chairman of Nomination and Remuneration Committee

137

ANNUAL REPORT 2014

Report of the Board of Directors’ Responsibility for the Financial Reporting According to the Public Limited Companies Act B.E. 2535, the Accounting Act B.E. 2543, the Securities and Exchange Act B.E. 2535 and the Capital Market Supervisory Board’s Notification Re: Criterial, Conditions and Procedures for Disclosure of Financial Positions and Performance of Securities Issuers, the Board is required to ensure that the financial statements of the Company are properly prepared to accurately and reasonably disclose its financial positions, performance, changes in the equity and cash flows in the prior year.

The Board of Directors of Ichitan Group Public Company Limited is responsible for the Company’s financial statements and financial information disclosed in the annual report. The financial statements are prepared in accordance with accounting standards generally accepted in Thailand which are primarily in line with international standards and are based on appropriate accounting policies that are applied on a consistent basis. The financial statements are also prepared with the use of appropriate estimates and judgments. Material information is adequately disclosed in the notes to the financial statements together with the management discussion and analysis in order to facilitate understanding of all shareholders and stakeholders about the Company’s overall financial position.

The Board has undertaken steps to ensure the effectiveness of the Company’s internal controls with a view to provide reasonable assurance that the accounting records are accurate, complete and adequate for effective safeguard of assets and identification of vulnerabilities and weaknesses to prevent against frauds and material irregularities and errors.

The Board has appointed the Audit Committee which is comprised of non-executive, independent directors to conduct a qualitative review of the Company’s financial reports and internal controls. The opinions of the Audit Committee on these matters are under the Audit Committee’s Report section of this annual report.

The Board is of the view that the Company’s overall internal controls are satisfactory and can provide reasonable confidence in the reliability of the Company’s financial system and that the financial statements as of 31 December 2014 of the Company are in accordance the accounting standards generally accepted in Thailand and applicable laws and notifications.

Mr. Tan Passakornnatee

Chairman of the Board

Ichitan Group Public Company Limited

Financial statements for the year ended31 December 2014

andIndependent Auditor’s Report

Annual Report 2014

139

Independent Auditor’s Report

To the Shareholders of Ichitan Group Public Company Limited

I have audited the accompanying financial statements in which the equity method is applied and separate financial statements of Ichitan Group Public Company Limited (the “Company”), which comprise the statement of financial position in which the equity method is applied and separate statement of financial position as at 31 December 2014, the related statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements in which the Equity Method is Applied and Separate Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in which the equity method is applied and separate financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements in which the equity method is applied and separate financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

My responsibility is to express an opinion on these financial statements in which the equity method is applied and separate financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements in which the equity method is applied and separate financial statements are free from material misstatement.

140

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements in which the equity method is applied and separate financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2014 and its financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards.

(Munchupa Singsuksawat)

Certified Public AccountantRegistration No. 6112

KPMG Phoomchai Audit Ltd.Bangkok25 February 2015

Annual Report 2014

141

The accompanying notes are an integral part of these financial statements.

Financial statementsin which the

equity method is applied

31 December

Separate financial statements

31 DecemberAssets Note 2014 2014 2013

(in Baht)

Current assets

Cash and cash equivalents 5 151,787,255 151,787,255 83,655,341

Trade accounts receivable 4, 6 909,636,298 909,636,298 808,969,969

Other receivables 7 77,716,093 77,716,093 98,510,229

Refundable value added tax 88,310,030 88,310,030 93,003,483

Inventories 8 675,902,595 675,902,595 338,450,088

Other current assets 12,326,010 12,326,010 11,237,387

Total current assets 1,915,678,281 1,915,678,281 1,433,826,497

Current assets

Cash and cash equivalents entity 9 117,683,141 135,620,414 -

Advances for purchase of machinery

and equipment 30,578,290 30,578,290 120,452,693

Advances for purchase of right

to use trademark 11 - - -

Property, plant and equipment 10 6,795,180,663 6,795,180,663 4,981,921,606

Intangible assets 11 86,573,463 86,573,463 2,517,509

Deferred tax assets 12 59,487,245 59,487,245 -

Other non-current assets 3,052,429 3,052,429 2,217,429

Total non-current assets 7,092,555,231 7,110,492,504 5,107,109,237

Total assets 9,008,233,512 9,026,170,785 6,540,935,734

Ichitan Group Public Company LimitedStatement of financial position

142




31 December


31 DecemberLiabilities and equity Note 2014 2014 2013

(in Baht)

Current liabilities

Short-term loans from financial

institutions 13 28,224,000 28,224,000 355,825,857

Trade accounts payable 14 519,324,591 519,324,591 288,858,239

Other payables 24,723,033 24,723,033 23,520,841

Payables on purchase of property,

plant and equipment 101,357,939 101,357,939 165,310,609

Accrued expenses 4 186,399,592 186,399,592 140,809,801

Current portion of long-term loans

from financial institutions 13 153,840,796 153,840,796 230,805,263

Other current liabilities 8,032,453 8,032,453 8,881,150

Total current liabilities 1,021,902,404 1,021,902,404 1,214,011,760

Non-current liabilities

Long-term loans from financial

institutions 13 1,780,437,180 1,780,437,180 2,350,929,857

Long-term loans from related parties 4, 13 - - 1,000,000,000

Employee benefit obligations 15 10,960,402 10,960,402 7,681,006

Total non-current liabilities 1,791,397,582 1,791,397,582 3,358,610,863

Total liabilities 2,813,299,986 2,813,299,986 4,572,622,623


Annual Report 2014

143




31 December


31 DecemberLiabilities and equity (continued) Note 2014 2014 2013

(in Baht)

Equity

Share capital 16

Authorised share capital 1,300,000,000 1,300,000,000 1,300,000,000

Issued and paid-up share capital 1,300,000,000 1,300,000,000 1,000,000,000

Additional paid in capital 16

Premium on ordinary shares 3,515,423,218 3,515,423,218 -

Surplus on share-based payment

transactions 16 56,079,360 56,079,360 56,079,360

Retained earnings

Appropriated

Legal reserve 17 130,000,000 130,000,000 45,000,000

Unappropriated 1,211,394,874 1,211,368,221 867,233,751

Other components of equity 9 (17,963,926) - -

Total equity 6,194,933,526 6,212,870,799 1,968,313,111

Total liabilities and equity 9,008,233,512 9,026,170,785 6,540,935,734


144




Year ended31 December



Note 2014 2014 2013

(in Baht)

Income

Revenue from sale of goods 4 6,179,080,161 6,179,080,161 6,484,375,339

Interest income 9,364,836 9,364,836 1,352,337

Other income 4 20,420,163 20,420,163 46,113,591

Total income 6,208,865,160 6,208,865,160 6,531,841,267

Expenses

Cost of sale of goods 8, 20 4,065,204,432 4,065,204,432 4,425,029,742

Selling expenses 20 774,179,994 774,179,994 931,190,500

Administrative expenses 4, 20 250,418,023 250,418,023 130,348,130

Finance costs 4, 21 99,415,486 99,415,486 161,618,262

Total expenses 5,189,217,935 5,189,217,935 5,648,186,634

Share of profit of jointly-

controlled entity 9 26,653 - -

Profit before income tax expense 1,019,673,878 1,019,647,225 883,654,633

Tax income 22 59,086,769 59,086,769 -

Profit for the year 1,078,760,647 1,078,733,994 883,654,633

Ichitan Group Public Company LimitedStatement of comprehensive income

Annual Report 2014

145







Note 2014 2014 2013

(in Baht)

Other comprehensive income

Foreign currency translation

differences for foreign operations (17,963,926) - -

Defined benefit plan actuarial

losses 15 - - (2,002,379)

Income tax on other

comprehensive income

ก�ำไรขำดทุนเบ็ดเสร็จอื่น 12 400,476 400,476 -

Other comprehensive income

for the year, net of income tax (17,563,450) 400,476 (2,002,379)

Total comprehensive income

for the year 1,061,197,197 1,079,134,470 881,652,254

Earnings per share

Basic earnings per share 24 0.89 0.89 0.88

ไ ผ

Ichitan Group Public Company LimitedStatement of comprehensive income

Annu

al R

epor

t 201

4

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts.

146

Not

e

Fina

ncia

l sta

tem

ents

in w

hich

the

equi

ty m

etho

d is

app

lied

Issu

ed a

nd

paid

-up

shar

e ca

pita

l

Prem

ium

on

ordi

nary

sh

ares

Surp

lus

onsh

are-

base

dpa

ymen

ttra

nsac

tions

Reta

ined

ear

ning

sOt

her c

ompo

nent

s of

equ

ity

Lega

lre

serv

eUn

appr

opria

ted

Curr

ency

trans

latio

ndi

ffere

nces

Tota

lot

her

com

pone

nts

of e

quity

Tota

leq

uity

(in B

aht)

Year

end

ed 3

1 De

cem

ber 2

014

Bala

nce

at 1

Jan

uary

201

4 1

,000

,000

,000

-

5

6,07

9,36

0 4

5,00

0,00

0 8

67,2

33,7

51

-

-

1,9

68,3

13,1

11

Tran

sact

ions

with

ow

ners

, rec

orde

d

dire

ctly

in e

quity

Issu

e of

ord

inar

y sh

ares

16 3

00,0

00,0

00

3,5

15,4

23,2

18

-

-

-

-

-

3,8

15,4

23,2

18

Divi

dend

s to

ow

ners

of t

he C

ompa

ny25

-

-

-

-

(650

,000

,000

) -

-

(6

50,0

00,0

00)

Tota

l tra

nsac

tions

with

ow

ners

, rec

orde

d

di

rect

ly in

equ

ity 3

00,0

00,0

00

3,5

15,4

23,2

18

-

-

(650

,000

,000

) -

-

3

,165

,423

,218

Com

preh

ensi

ve in

com

e fo

r the

yea

rPr

ofit

for t

he y

ear

-

-

-

-

1,0

78,7

60,6

47

-

-

1,0

78,7

60,6

47

Othe

r com

preh

ensi

ve in

com

e fo

r the

yea

r -

-

-

-

4

00,4

76

(17,

963,

926)

(17,

963,

926)

(17,

563,

450)

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r -

-

-

-

1

,079

,161

,123

(1

7,96

3,92

6) (1

7,96

3,92

6) 1

,061

,197

,197

Tran

sfer

to le

gal r

eser

ve17

-

-

-

85,

000,

000

(85,

000,

000)

-

-

-

Bala

nce

at 3

1 De

cem

ber 2

014

1,3

00,0

00,0

00

3,5

15,4

23,2

18

56,

079,

360

130

,000

,000

1

,211

,394

,874

(1

7,96

3,92

6) (1

7,96

3,92

6) 6

,194

,933

,526

Ichi

tan

Grou

p Pu

blic

Com

pany

Lim

ited

Stat

emen

t of c

hang

es in

equ

ity

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts.

147

Not

e

Sepa

rate

fina

ncia

l sta

tem

ents

Issu

ed a

nd

paid

-up

shar

e ca

pita

l

Surp

lus

onsh

are-

base

dpa

ymen

ttra

nsac

tions

Reta

ined

ear

ning

s

Tota

leq

uity

Lega

lre

serv

eUn

appr

opria

ted

(in B

aht)

Year

end

ed 3

1 De

cem

ber 2

013

Bala

nce

at 1

Jan

uary

201

3 1

,000

,000

,000

4

3,31

4,06

0 -

3

0,58

1,49

7 1

,073

,895

,557

Tran

sact

ions

with

ow

ners

, rec

orde

d di

rect

ly in

equ

ity

Shar

e-ba

sed

paym

ent t

rans

actio

ns16

-

12,

765,

300

-

-

12,

765,

300

Tota

l tra

nsac

tions

with

ow

ners

, rec

orde

d di

rect

ly in

equ

ity -

1

2,76

5,30

0 -

-

1

2,76

5,30

0

Com

preh

ensi

ve in

com

e fo

r the

yea

r

Prof

it fo

r the

yea

r -

-

-

8

83,6

54,6

33

883

,654

,633

Othe

r com

preh

ensi

ve in

com

e fo

r the

yea

r -

-

-

(2

,002

,379

) (2

,002

,379

)

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r -

-

-

8

81,6

52,2

54

881

,652

,254

Tran

sfer

to le

gal r

eser

ve17

-

-

45,

000,

000

(45,

000,

000)

-

Bala

nce

at 3

1 De

cem

ber 2

013

1,0

00,0

00,0

00

56,

079,

360

45,

000,

000

867

,233

,751

1

,968

,313

,111

Ichi

tan

Grou

p Pu

blic

Com

pany

Lim

ited

Stat

emen

t of c

hang

es in

equ

ity

Annu

al R

epor

t 201

4

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts.

148

Not

e

Sepa

rate

fina

ncia

l sta

tem

ents

Issu

ed a

nd

paid

-up

shar

e ca

pita

lPr

emiu

m o

nor

dina

ry s

hare

s

Surp

lus

onsh

are-

base

dpa

ymen

ttra

nsac

tions

Reta

ined

ear

ning

s

Tota

leq

uity

Lega

lre

serv

eUn

appr

opria

ted

(in B

aht)

Year

end

ed 3

1 De

cem

ber 2

014

Bala

nce

at 1

Jan

uary

201

4 1

,000

,000

,000

-

5

6,07

9,36

0 4

5,00

0,00

0 8

67,2

33,7

51

1,9

68,3

13,1

11

Tran

sact

ions

with

ow

ners

, rec

orde

d di

rect

ly in

equ

ity

Issu

e of

ord

inar

y sh

ares

16 3

00,0

00,0

00

3,5

15,4

23,2

18

-

-

-

3,8

15,4

23,2

18

Divi

dend

s to

ow

ners

of t

he C

ompa

ny25

-

-

-

-

(650

,000

,000

) (6

50,0

00,0

00)

Tota

l tra

nsac

tions

with

ow

ners

, rec

orde

d di

rect

ly in

equ

ity 3

00,0

00,0

00

3,5

15,4

23,2

18

-

-

(650

,000

,000

) 3

,165

,423

,218

Com

preh

ensi

ve in

com

e fo

r the

yea

r

Prof

it fo

r the

yea

r -

-

-

-

1

,078

,733

,994

1

,078

,733

,994

Othe

r com

preh

ensi

ve in

com

e fo

r the

yea

r -

-

-

-

4

00,4

76

400

,476

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r -

-

-

-

1

,079

,134

,470

1

,079

,134

,470

Tran

sfer

to le

gal r

eser

ve17

-

-

-

85,

000,

000

(85,

000,

000)

-

Bala

nce

at 3

1 De

cem

ber 2

014

1,3

00,0

00,0

00

3,5

15,4

23,2

18

56,

079,

360

130

,000

,000

1

,211

,368

,221

6

,212

,870

,799

ไ Ichi

tan

Grou

p Pu

blic

Com

pany

Lim

ited

Stat

emen

t of c

hang

es in

equ

ity

Annual Report 2014

149


Ichitan Group Public Company LimitedStatement of cash flows

Financial statements

in which the equitymethod is applied

Year ended 31 December

Separatefinancial statements


Note 2014 2014 2013

(in Baht)

Cash flows from operating activities

Profit for the year 1,078,760,647 1,078,733,994 883,654,633

Adjustments for

Depreciation 10 369,583,530 369,583,530 266,839,090

Amortisation of intangible assets 11 331,596 331,596 312,000

Impairment losses on advances for

purchase of right to use trademark 11 37,383,178 37,383,178 -

Impairment losses on intangible

assets 11 84,112,150 84,112,150 -

Interest income (9,364,836) (9,364,836) (1,352,337)

Finance costs 21 99,415,486 99,415,486 161,618,262

Loss on write-off of inventories 2,046,244 2,046,244 4,790,457

Allowance for decline in value of

inventories 8 11,733,071 11,733,071 3,712,136

Unrealised (gain) loss on exchange 1,574,188 1,574,188 (3,929,198)

Loss on write-off of equipment 192,141 192,141 2,990,189

(Gain) loss on disposal of equipment 4,044 4,044 (57,783)

Gain on disposal of intangible assets - - (1,851)

Employee benefit expenses 15 3,279,396 3,279,396 (197,648)

Expenses for share-based payment

transactions 16 - - 12,765,300

Share of profit of jointly-controlled

entity 9 (26,653) - -

Tax income 22 (59,086,769) (59,086,769) -

1,619,937,413 1,619,937,413 1,331,143,250

150








Note 2014 2014 2013(in Baht)

Changes in operating assets and liabilitiesTrade accounts receivable (100,666,329) (100,666,329) (344,202,929)Other receivables 20,794,136 20,794,136 30,892,157 Refundable value added tax 4,693,453 4,693,453 83,283,464 Inventories (351,231,822) (351,231,822) 107,069,327 Other current assets (1,088,623) (1,088,623) (6,124,771)Other non-current assets (835,000) (835,000) 6,750,282 Trade accounts payable 230,538,722 230,538,722 (170,385,253)Other payables 1,202,192 1,202,192 (5,322,490)Accrued expenses 50,322,598 50,322,598 (85,430,776)Other current liabilities (848,697) (848,697) 3,224,016 Net cash from operating activities 1,472,818,043 1,472,818,043 950,896,277

Cash flows from investing activitiesInterest received 9,364,836 9,364,836 1,352,337 Advances for purchase of machinery and equipment 88,353,754 88,353,754 (59,063,159)Advances for purchase of right to use trademark (37,383,178) (37,383,178) - Purchase of property, plant and equipment (2,231,441,339) (2,231,441,339) (1,532,392,883)Sale of property, plant and equipment 62,617 62,617 93,156,396 Purchase of intangible assets (168,499,700) (168,499,700) (158,589)Sale of intangible assets - - 4,534,600 Net cash outflow on investment in jointly-controlled entity 9 (135,620,414) (135,620,414) - Net cash used in investing activities (2,475,163,424) (2,475,163,424) (1,492,571,298)

Annual Report 2014

151








Note 2014 2014 2013(in Baht)

Cash flows from financing activitiesInterest paid (119,886,922) (119,886,922) (168,669,864)Dividends paid to owners of the Company 25 (650,000,000) (650,000,000) - Proceeds from borrowings 1,655,856,997 1,655,856,997 2,502,483,374 Repayment of borrowings (3,630,915,998) (3,630,915,998) (1,744,590,966)Net proceeds from initial public offering 16 3,815,423,218 3,815,423,218 - Net cash from financing activities 1,070,477,295 1,070,477,295 589,222,544

Net increase in cash and cash equivalents 68,131,914 68,131,914 47,547,523 Cash and cash equivalents at 1 January 83,655,341 83,655,341 36,107,818 Cash and cash equivalents at 31 December 5 151,787,255 151,787,255 83,655,341

Supplemental disclosures of cash flows information: Property, plant and equipment paid by cash are detailed as follows:Increase in property, plant and equipment 2,183,101,389 2,183,101,389 1,314,117,809 Less - Changes in payables 63,952,670 63,952,670 228,006,158 - Unrealised (gain) loss on exchange 125,909 125,909 (3,929,198) - Capitalised interest (15,738,629) (15,738,629) (5,801,886)Property, plant and equipment paid by cash 2,231,441,339 2,231,441,339 1,532,392,883

152

Ichitan Group Public Company LimitedNotes to the financial statements

Note Contents

1 General information

2 Basis of preparation of the financial statements

3 Significant accounting policies

4 Related parties

5 Cash and cash equivalents

6 Trade accounts receivable

7 Other receivables

8 Inventories

9I nvestment in jointly-controlled entity

10 Property, plant and equipment

11 Intangible assets

12 Deferred tax

13 Interest-bearing liabilities

14 Trade accounts payable

15 Employee benefit obligations

16 Share capital

17 Reserves

18 Segment information

19 Employee benefit expenses

20 Expenses by nature

21 Finance costs

22 Income tax

23 Promotional privileges

24 Basic earnings per share

25 Dividends

26 Financial instruments

27 Commitments with non-related parties

28 Events after the reporting period

29 Thai Financial Reporting Standards not yet adopted

Annual Report 2014

153


These notes form an integral part of the financial statements.

The financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai language. These English language financial statements have been prepared from the Thai language statutory financial statements, and were approved for issue by the Board of Directors on 25 February 2015.

1 General informationIchitan Group Public Company Limited, the “Company”, is incorporated in Thailand on 3 September 2010 and has its registered office as follows:

Head office is located at 2922/301-303, 28th Floor, Charn Issara II Building, New Petchburi Road, Kwang Bangkapi, Khet Huaykwang, Bangkok 10310, Thailand.

Branch office is located at 111/1 Moo 4, Rojana Industrial Park, Tambol U-Thai, Amphur U-Thai, Ayutthaya 13120, Thailand.

The Company was listed on the Stock Exchange of Thailand in April 2014.

The Company’s major shareholders during the financial year were Tan Passakornnatee and Eng Passakornnatee who owned 14% and 9% of the Company’s share capital as at 31 December 2014, respectively.

The principal activities of the Company are the manufacturing and sale of beverages.

Detail of jointly-controlled entity as at 31 December 2014 is disclosed in note 9 to the financial statements.

2 Basis of preparation of the financial statements(a) Statement of compliance

The financial statements are prepared in accordance with Thai Financial Reporting Standards (“TFRS”); guidelines promulgated by the Federation of Accounting Professions (“FAP”); and applicable rules and regulations of the Thai Securities and Exchange Commission.

The FAP has issued the following new and revised TFRS relevant to the Company’s operations and effective for annual accounting periods beginning on or after 1 January 2014:

TFRS TopicTAS 1 (revised 2012) Presentation of financial statementsTAS 7 (revised 2012) Statement of Cash FlowsTAS 12 (revised 2012) Income Taxes

154


TFRS TopicTAS 17 (revised 2012) LeasesTAS 18 (revised 2012) Revenue TAS 19 (revised 2012) Employee BenefitsTAS 21 (revised 2012) The Effects of Changes in Foreign Exchange RatesTAS 24 (revised 2012) Related Party DisclosuresTAS 31 (revised 2012) Interests in Joint VenturesTAS 34 (revised 2012) Interim Financial ReportingTAS 36 (revised 2012) Impairment of AssetsTAS 38 (revised 2012) Intangible AssetsTFRS 2 (revised 2012) Share-based PaymentTFRS 5 (revised 2012) Non-current Assets held for Sale and Discontinued OperationsTFRS 8 (revised 2012) Operating SegmentsTFRIC 1 Changes in Existing Decommissioning, Restoration and Similar LiabilitiesTFRIC 4 Determining whether an Arrangement contains a LeaseTFRIC 10 Interim Financial Reporting and Impairment

TFRIC 13 Customer Loyalty Programmes

TIC 15 Operating Leases-Incentives

TIC 27 Evaluating the Substance of Transactions Involving the Legal

Form of a Lease

TIC 32 Intangible Assets-Web Site Costs

The initial application of these new and revised TFRS has resulted in changes in certain of the Company’s accounting policies. These changes have no material effect on the financial statements.

In addition to the above new and revised TFRS, the FAP has issued a number of other new and revised TFRS which are effective for annual financial periods beginning on or after 1 January 2015 and have not been adopted in the preparation of these financial statements. Those new and revised TFRS that are relevant to the Company’s operations are disclosed in note 29 to the financial statements.

Annual Report 2014

155


(b) Basis of measurementThe financial statements have been prepared on the historical cost basis except as stated in the accounting policies.

(c) Functional and presentation currencyThe financial statements are prepared and presented in Thai Baht, which is the Company’s functional currency. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest thousand Baht unless otherwise stated.

(d) Use of estimates and judgementsThe preparation of financial statements in conformity with TFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is included in the following notes:

Note 3 (q) Current and deferred taxation

Note 11 Key assumptions used in discounted cash flow projections

Note 12 Utilisation of tax losses

Note 15 Measurement of defined benefit obligations

Note 26 Valuation of financial instruments

(e) The first time preparation of the financial statements in which the equity method is applied

During 2014, the Company has invested in PT Ichi Tan Indonesia, a jointly-controlled entity, with PT Atri Pasifik. As established by the joint venture agreement, investors have joint control over the significant financial and operating decisions. Accordingly, the Company has accounted for the investment in the jointly-controlled entity using the equity method and has initially prepared the financial statements in which the equity method is applied for the year ended 31 December 2014 (see note 9 to the financial statements).

156


3 Significant accounting policiesThe accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(a) Basis of preparation of the financial statements in which the equity method is appliedThe financial statements in which the equity method is applied relate to the Company and a jointly-controlled entity.

Jointly-controlled entity

Jointly-controlled entity is the entity over whose activities the Company has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

Investment in jointly-controlled entity is accounted for in the financial statements in which the equity method is applied using the equity method (equity-accounted investee) and are recognised initially at cost. The cost of the investment includes transaction costs.

Transactions eliminated on financial statements in which the equity method is applied

Unrealised gains arising from transactions with jointly-controlled entity are eliminated against the investment to the extent of the Company’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currenciesForeign currency transactions

Transactions in foreign currencies are translated to the functional currency at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rates at the reporting date.

Non-monetary assets and liabilities measured at cost in foreign currencies are translated to the functional currency at the exchange rates at the dates of the transactions.

Foreign currency differences are generally recognised in profit or loss.

Annual Report 2014

157


Foreign operations

The assets and liabilities of foreign operations are translated to Thai Baht at the exchange rates at the reporting date.

The revenues and expenses of foreign operations are translated to Thai Baht at rates approximating the exchange rates at the dates of the transactions.

Foreign exchange differences are recognised in other comprehensive income and presented in the foreign currency translation reserve in equity until disposal of the investment.

When a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in the foreign currency translation reserve in equity until disposal of the investment.

(c) Cash and cash equivalentsCash and cash equivalents comprise cash balances, call deposits and highly liquid short-term investments.

(d) Trade and other accounts receivableTrade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts.

The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.

(e) InventoriesInventories are measured at the lower of cost and net realisable value.

Cost is calculated using the weighted average cost principle, and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale.

158


(f) InvestmentInvestment in jointly-controlled entity

Investment in jointly-controlled entity in the separate financial statements of the Company is accounted for using the cost method. Investment in jointly-controlled entity in the financial statements in which the equity method is applied is accounted for using the equity method.

(g) Property, plant and equipmentRecognition and measurement

Owned assets

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in profit or loss.

Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Annual Report 2014

159


Depreciation

Depreciation is calculated based on depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. The estimated useful lives are as follows:

Land improvements 5 - 20 yearsBuilding and building improvements 5 - 30 yearsMachinery and equipment 10 - 15 yearsFurniture, fixtures and office equipment 5 - 15 yearsTool and equipment 5 yearsVehicles 5 years

No depreciation is provided on freehold land or assets under construction and installation.

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(h) Intangible assetsIntangible assets that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.

Amortisation

Amortisation is based on the cost of the asset, or other amount substituted for cost, less its residual value.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than right to use trademark, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives for the current and comparative periods are as follows:

Software licences 10 yearsRight to use trademark Indefinite useful lives

160


Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(i) ImpairmentThe carrying amounts of the Company’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For intangible assets that have indefinite useful lives, the recoverable amount is estimated each year at the same time.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in profit or loss.

Calculation of recoverable amount

The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment

Impairment losses recognised in prior periods in respect of non-financial assets are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(j) Interest-bearing liabilitiesInterest-bearing liabilities are recognised at cost.

(k) Trade and other accounts payableTrade and other accounts payable are stated at cost.

Annual Report 2014

161


(l) Employee benefitsDefined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity (provident fund) and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the term of the Company’s obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed by a qualified actuary using the projected unit credit method.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss.

The Company recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income and all expenses related to defined benefit plans in profit or loss.

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

Share-based payments

The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the actual number of awards for which the related service and non-market vesting conditions are expected to be met. For business partners, the share-based payment awards granted vest immediately on the grant date, and the grant-date fair value of the awards is recognised as an expense immediately.

162


(m) ProvisionsA provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(n) RevenueRevenue excludes value added taxes and is arrived at after deduction of trade discounts.

Sale of goods

Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs or the probable return of goods.

Loyalty programmes

The Company has customer loyalty programmes whereby customers are awarded the right to purchase products from the Company at a discount. The fair value of the consideration received or receivable in respect of the initial sale is allocated between the right and the other components of the sale. The amount allocated is estimated by reference to the fair value of the right to purchase products at a discount. The fair value is estimated based on the amount of the discount adjusted to take into account the expected forfeiture rate. Such amount is deferred and revenue is recognised only when the right is redeemed and the Company has fulfilled its obligations. The amount of revenue recognised in those circumstances is based on the number of the right that has been redeemed in exchange for discounted products, relative to the total number of the right that is expected to be redeemed. Deferred revenue is also released to profit or loss when it is no longer considered probable that the right will be redeemed.

Interest income

Interest income is recognised in profit or loss on the accrual basis.

(o) Finance costsFinance costs comprise interest expense on borrowings and unwinding of the discount on provisions and contingent consideration.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss.

Annual Report 2014

163


(p) Lease paymentsPayments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Determining whether an arrangement contains a lease

At inception of an arrangement, the Company determines whether such an arrangement is or contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Company the right to control the use of the underlying asset.

At inception or upon reassessment of the arrangement, the Company separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company concludes for a finance lease that it is impracticable to separate the payments reliably, an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Company’s incremental borrowing rate.

(q) Income taxIncome tax expense for the year comprises current and deferred tax. Current and deferred taxes are recognised in profit or loss except to the extent that they relate to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and differences relating to investments in jointly-controlled entities to the extent that is probable that they will not reverse in the foreseeable future.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

164


Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively exacted at the reporting date.

In determining the amount of current and deferred tax, the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(r) Earnings per shareThe Company presents basic earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.

(s) Segment reportingSegment results that are reported to the chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Annual Report 2014

165


4 Related partiesFor the purposes of these financial statements, parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control or joint control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Relationship with jointly-controlled entity is disclosed in note 9 to the financial statements. Relationship with key management and other related parties were as follows:

Name of entities Country of Nature of relationships

incorporation/Tan Passakornnatee Thai Persons having authority and responsibility

for planning, directing and controlling the activities of the entity, directly or indirectly, including major shareholder and director of the Company

Eng Passakornnatee Thai Major shareholder and director of the Company

I Am Green Tea Co., Ltd. Thailand Shared shareholders and a close relative of the director of the Company is the director

Kin Kab Tan Co., Ltd. Thailand Shared directors and shareholders

Tan Asset Co., Ltd. Thailand Shared shareholders

Tan Eng Asset Co., Ltd. Thailand Shared directors and shareholders

Passakornnatee Co., Ltd. Thailand Shared directors and shareholders

Japanese Prime Restaurants Thailand Shared directors and shareholders

Management Co., Ltd.

Wedding Business Consultant Co., Ltd.

Thailand Shared directors and shareholders

Ezili Company Limited Thailand Shared shareholders

Kin Rong Deum Co., Ltd. Thailand Shared shareholders

Tanboon Co., Ltd. Thailand Shared directors and shareholders

166


The pricing policies for transactions with related parties are explained further below.

Transactions Pricing policiesSale/Purchase of goods Market priceOther income/expense Agreed priceInterest expense Close to the prevailing market interest rateSales promotion expenses Agreed price

Significant transactions for the years ended 31 December with related parties were as follows:

Financialstatements in

which the equity method

is appliedSeparate

financial statementsYear ended 31 December 2014 2014 2013

(in thousand Baht)

Related parties

Sale of goods 741,215 741,215 1,034,575

Gain on sale of assets of food segment - - 67

Sales promotion expenses - - 14,007

Other expense 3,221 3,221 4,588

Interest expense 11,726 11,726 42,096

Key management personnel

Key management personnel compensation

Short-term employee benefit 28,809 20,988

Post-employment benefits 1,668 1,731

Total key management personnel

compensation 30,477 30,477 22,719

Annual Report 2014

167


Balances as at 31 December with related parties were as follows:



is appliedSeparate

financial statementsTrade accounts receivable 2014 2014 2013

(in thousand Baht)

Related parties 38,238 38,238 206,926



is appliedSeparate

financial statementsAccrued expenses 2014 2014 2013

(in thousand Baht)

Related parties 10,253 10,253 -



is appliedSeparate

financial statementsAccrued interest 2014 2014 2013

(in thousand Baht)

Major shareholder - - 3,397



is appliedSeparate

financial statementsLong-term loans from related parties 2014 2014 2013

(in thousand Baht)

Major shareholder - - 1,000,000

168


Movements during the years ended 31 December of long-term loans from related parties were as follows:



is appliedSeparate

financial statements2014 2014 2013

(in thousand Baht)

Major shareholder

At 1 January 1,000,000 1,000,000 750,000

Increase - - 520,000

Decrease (1,000,000) (1,000,000) (270,000)

At 31 December - - 1,000,000

Related party

At 1 January - - 30,000

Decrease - - (30,000)

At 31 December - - -

Total long-term loans from related parties

At 1 January 1,000,000 1,000,000 780,000

Increase - - 520,000

Decrease (1,000,000) (1,000,000) (300,000)

At 31 December - - 1,000,000

The unsecured long-term loans from a major shareholder bear interest at the rate of 4% to 5% per annum. The Company fully repaid these loans in April 2014.

Annual Report 2014

169


Significant agreement with related party

Product distribution agreement

On 20 June 2014, the Company entered into an agreement to grant a related party (I Am Green Tea Co., Ltd.) the authority and responsibility to act as a product distributor for the Company. This agreement shall be in effect from 1 July 2014 to 30 June 2017.

5 Cash and cash equivalentsFinancial

statements inwhich the



2014 2014 2013

(in thousand Baht)

Cash on hand 2,280 95

Cash at financial institutions - current accounts (7,293) (7,293) (84,140)

Cash at financial institutions - savings accounts 156,800 156,800 167,700

Total 151,787 83,655

Cash and cash equivalents of the Company as at 31 December 2014 and 2013 were denominated entirely in Thai Baht.

6 Trade accounts receivableFinancial




Note 2014 2014 2013

(in thousand Baht)

Related parties 4 38,238 38,238 206,926

Other parties 871,398 871,398 602,044

Total 909,636 909,636 808,970

170


Aging analyses for trade accounts receivable were as follows:



is appliedSeparate


(in thousand Baht)Related partiesWithin credit terms 38,238 38,238 206,926

38,238 38,238 206,926

Other partiesWithin credit terms 870,723 870,723 601,976Overdue less than 3 months 675 675 68

871,398 871,398 602,044

Total 909,636 909,636 808,970

The normal credit term granted by the Company ranges from 30 days to 45 days.

Trade accounts receivable of the Company as at 31 December 2014 and 2013 were denominated entirely in Thai Baht.

7 Other receivablesFinancial




2014 2014 2013(in thousand Baht)

Other partiesRefundable import duty 49,332 49,332 83,776Rebate and sponsorship receivables 16,955 16,955 9,816Prepaid expenses 10,914 10,914 4,226Others 515 515 692Total 77,716 77,716 98,510

Annual Report 2014

171


8 Inventories



is appliedSeparate


(in thousand Baht)

Finished goods 410,362 410,362 200,213

Raw materials 261,046 261,046 139,442

Supplies 10,508 10,508 2,507

Total 681,916 681,916 342,162

Less allowance for decline in value (6,013) (6,013) (3,712)

Net 675,903 675,903 338,450

Inventories recognised as an expense in

‘cost of sale of goods’:

- Cost 4,051,425 4,051,425 4,425,030

- Write-down to net realisable value 11,733 11,733 -

- Loss on write-off of inventories 2,046 2,046 -

Net 4,065,204 4,065,204 4,425,030

172


9 Investment in jointly-controlled entity



is appliedSeparate


(in thousand Baht)

Jointly-controlled entity

At 1 January - - -

Acquisitions 135,620 135,620 -

Share of net profits of equity-accounted

jointly-controlled entity 27 - -

Foreign currency translation differences (17,964) - -

At 31 December 117,683 135,620 -

Acquisitions

On 27 August 2014, the Company entered into a joint venture agreement with PT Atri Pasifik (“AP”), a company incorporated in Indonesia, in order to invest in PT Ichi Tan Indonesia, a new joint venture established in Indonesia. The purposes of the joint venture are to produce and sell ready-to-drink beverage branded “Ichitan” in Indonesia. The Company and AP will equally invest in the joint venture (50% of the issued and paid-up share capital of the joint venture) totalling Indonesian Rupiah 200,000 million (or approximately Baht 575 million). The Company paid an initial authorised share capital in 50% of the paid-up share capital of Baht 135.6 million and the incorporation of the joint venture was completed on 25 November 2014. As at 31 December 2014, PT Ichi Tan Indonesia is the jointly-controlled entity of the Company.

Ichi

tan

Grou

p Pu

blic

Com

pany

Lim

ited

Not

es to

the

finan

cial

sta

tem

ents

173

Inve

stm

ent i

n jo

intly

-con

trolle

d en

tity

as a

t 31

Dece

mbe

r 201

4 an

d 20

13 fo

r the

yea

rs th

en e

nded

wer

e as

follo

ws:

Fina

ncia

l sta

tem

ents

in w

hich

the

equi

ty m

etho

d is

app

lied

/ Se

para

te fi

nanc

ial s

tate

men

tsTy

pe o

f bu

sine

ssCo

untry

of

inco

rpor

atio

nOw

ners

hip

inte

rest

Paid

-up

capi

tal

Cost

Equi

ty20

1420

1320

1420

1320

1420

1320

1420

13

(%)

(in th

ousa

nd B

aht)

Join

tly-c

ontro

lled

entit

y

Man

ufac

turin

g an

d

PT Ic

hi T

an In

done

sia

sale

of b

ever

ages

Indo

nesi

a50

-28

6,78

0-

135,

620

-11

7,68

3-

Tota

l13

5,62

0-

117,

683

-

Non

e of

the

Com

pany

’s jo

intly

-con

trolle

d en

tity

is p

ublic

ly li

sted

and

con

sequ

ently

do

not h

ave

publ

ishe

d pr

ice

quot

atio

ns.

Annu

al R

epor

t 201

4

Ichi

tan

Grou

p Pu

blic

Com

pany

Lim

ited

Not

es to

the

finan

cial

sta

tem

ents

174

The

follo

win

g su

mm

aris

ed fi

nanc

ial i

nfor

mat

ion

on jo

intly

-con

trolle

d en

tity

is n

ot a

djus

ted

for t

he p

erce

ntag

e ow

ners

hip

held

by

the

Com

pany

:

Repo

rting

da

teOw

ners

hip

inte

rest

Curr

ent

asse

ts

Non

-cu

rren

t as

sets

Tota

l as

sets

Curr

ent

liabi

litie

s

Non

-cu

rren

t lia

bilit

ies

Tota

llia

bilit

ies

Tota

lre

venu

esTo

tal

expe

nses

Prof

it(%

)(in

thou

sand

Bah

t)

2014

Join

tly-c

ontro

lled

entit

y

PT Ic

hi T

an In

done

sia

31 D

ecem

ber

5025

1,20

910

251,

219

314

-31

41,

057

1,00

453

Tota

l25

1,20

910

251,

219

314

-31

41,

057

1,00

453

Ichi

tan

Grou

p Pu

blic

Com

pany

Lim

ited

Not

es to

the

finan

cial

sta

tem

ents

175

10

Prop

erty

, pla

nt a

nd e

quip

men

t Fina

ncia

l sta

tem

ents

in w

hich

the

equi

ty m

etho

d is

app

lied

/ Se

para

te fi

nanc

ial s

tate

men

ts

Land

Land

impr

ove-

men

ts

Build

ing

and

build

ing

impr

ove-

men

ts

Mac

hine

ryan

deq

uipm

ent

Furn

iture

,fix

ture

san

dof

fice

equi

pmen

t

Tool

and

equi

pmen

tVe

hicl

es

Asse

tsun

der

cons

truct

ion

and

inst

alla

tion

Tota

l(in

thou

sand

Bah

t)Co

stAt

1 J

anua

ry 2

013

200,

508

54,7

901,

065,

007

1,85

9,34

846

,906

42,5

813,

621

812,

997

4,08

5,75

8Ad

ditio

ns-

422

22,7

1812

9,29

17,

821

19,0

9152

11,

134,

253

1,31

4,11

7Tr

ansf

ers

--

17,5

3391

7,03

7-

1,74

2-

(936

,312

)-

Disp

osal

s-

--

-(1

2)(3

,961

)(1

64)

-(4

,137

)At

31

Dece

mbe

r 201

3

and

1 Ja

nuar

y 20

1420

0,50

855

,212

1,10

5,25

82,

905,

676

54,7

1559

,453

3,97

81,

010,

938

5,39

5,73

8Ad

ditio

ns23

1,19

0-

34,3

2542

,537

1,84

826

,927

544

1,84

5,73

02,

183,

101

Tran

sfer

s-

18,5

4479

5,54

497

1,74

9-

2,18

0-

(1,7

88,0

17)

-Di

spos

als

--

(25)

-(1

04)

(294

)(1

48)

-(5

71)

At 3

1 De

cem

ber 2

014

431,

698

73,7

561,

935,

102

3,91

9,96

256

,459

88,2

664,

374

1,06

8,65

17,

578,

268

Annu

al R

epor

t 201

4

Ichi

tan

Grou

p Pu

blic

Com

pany

Lim

ited

Not

es to

the

finan

cial

sta

tem

ents

176

Fina

ncia

l sta

tem

ents

in w

hich

the

equi

ty m

etho

d is

app

lied

/ Se

para

te fi

nanc

ial s

tate

men

ts

Land

Land

impr

ove-

men

ts

Build

ing

and

build

ing

impr

ove-

men

ts

Mac

hine

ryan

deq

uipm

ent

Furn

iture

,fix

ture

san

dof

fice

equi

pmen

t

Tool

and

equi

pmen

tVe

hicl

es

Asse

tsun

der

cons

truct

ion

and

inst

alla

tion

Tota

l(in

thou

sand

Bah

t)De

prec

iatio

nAt

1 J

anua

ry 2

013

-(2

,310

)(4

9,36

6)(8

1,21

6)(5

,319

)(8

,566

)(1

,348

)-

(148

,125

)De

prec

iatio

n ch

arge

fo

r the

yea

r -

(2,7

70)

(58,

404)

(186

,217

)(7

,286

)(1

1,37

7)(7

85)

-(2

66,8

39)

Disp

osal

s-

--

-4

1,08

460

-1,

148

At 3

1 De

cem

ber 2

013

an

d 1

Janu

ary

2014

-(5

,080

)(1

07,7

70)

(267

,433

)(1

2,60

1)(1

8,85

9)(2

,073

)-

(413

,816

)De

prec

iatio

n ch

arge

fo

r the

yea

r-

(3,4

77)

(90,

658)

(251

,606

)(8

,031

)(1

4,99

3)(8

19)

-(3

69,5

84)

Disp

osal

s-

-17

-66

149

81-

313

At 3

1 De

cem

ber 2

014

-(8

,557

)(1

98,4

11)

(519

,039

)(2

0,56

6)(3

3,70

3)(2

,811

)-

(783

,087

)

Net

boo

k va

lue

At 1

Jan

uary

201

320

0,50

852

,480

1,01

5,64

11,

778,

132

41,5

8734

,015

2,27

381

2,99

73,

937,

633

At 3

1 De

cem

ber 2

013

an

d 1

Janu

ary

2014

200,

508

50,1

3299

7,48

82,

638,

243

42,1

1440

,594

1,90

51,

010,

938

4,98

1,92

2At

31

Dece

mbe

r 201

443

1,69

865

,199

1,73

6,69

13,

400,

923

35,8

9354

,563

1,56

31,

068,

651

6,79

5,18

1

Annual Report 2014

177


Security

As at 31 December 2014, the Company had mortgaged/pledged assets amounting to approximately Baht 4,059.6 million (2013: Baht 2,157.3 million) as collateral against loans from financial institutions, as described in note 13 to the financial statements.

Assets under construction and installation

Assets under construction and installation as at 31 December 2014 amounted to Baht 1,068.7 million (2013: Baht 1,010.9 million), and mainly represented construction costs of factory building and cost of machinery and equipment including the related installation costs.

Capitalised borrowing costs relating to the construction of the factory amounted to Baht 15.7 million (2013: Baht 5.8 million), with a capitalisation rate ranging from 3.53% to 5.00% per annum (2013: 4.19% - 5.01% per annum).

11 Intangible assetsFinancial statements in whichthe equity method is applied /Separate financial statements

Softwarelicences

Right to usetrademark Total

(in thousand Baht)

Cost

At 1 January 2013 2,999 - 2,999

Additions 159 - 159

At 31 December 2013 and 1 January 2014 3,158 - 3,158

Additions 275 168,224 168,499

At 31 December 2014 3,433 168,224 171,657

178


Financial statements in whichthe equity method is applied /Separate financial statements

Softwarelicences

Right to usetrademark Total

(in thousand Baht)

Amortisation and impairment losses

At 1 January 2013 (328) - (328)

Amortisation for the year (312) - (312)

At 31 December 2013 and 1 January 2014 (640) - (640)

Amortisation for the year (332) - (332)

Impairment loss - (84,112) (84,112)

At 31 December 2014 (972) (84,112) (85,084)

Net book value

At 1 January 2013 2,671 - 2,671

At 31 December 2013 and 1 January 2014 2,518 - 2,518

At 31 December 2014 2,461 84,112 86,573

On 15 May 2014, the Company entered into a master sale and purchase agreement to acquire the right to use Bireley’s fruit beverage trademark, including the production formulas, from a local company for the consideration of Baht 224.3 million. The total purchase price is comprised of the right to use Bireley’s trademark to produce and distribute fruit beverage in 16 countries worldwide at the amounts as specified in the agreement, totalling Baht 215.0 million, and the production formulas of Baht 9.3 million. As at 31 December 2014, the Company has paid for the right to use Bireley’s trademark and production formulas in amount of Baht 205.6 million; of which the right to use Bireley’s trademark in certain countries and the production formulas are registered and transferred to the Company totalling Baht 168.2 million, and were recorded in the account “Intangible assets”. The rights to use Bireley’s trademark in some countries were in the process of registration, totalling Baht 37.4 million, and were recorded in the account “Advances for purchase of right to use trademark”. These advances will be transferred to the account “Intangible assets” upon the completion of the subsequent transfer.

Annual Report 2014

179


As at 31 December 2014, the Company has no plan to sell product under Bireley’s trademark to overseas countries, except for Thailand, and unable to reliably estimate future cash flows from the use of Bireley’s trademark excluding the use of Bireley’s trademark in Thailand. Therefore, the management of the Company recognised an impairment loss for the right to use trademark in the account “Intangible assets” amounting Baht 84.1 million and in the account “Advances for purchase of right to use trademark” amounting to Baht 37.4 million totalling Baht 121.5 million.

12 Deferred taxMovements in total deferred tax assets and liabilities during the year were as follows:

Financial statements in which the equity method is applied /

Separate financial statements(Charged) / Credited to:

At 1January

2014Profit or

loss

Othercomprehensive

income

At 31December

2014

(in thousand Baht)

Deferred tax assets

Allowance for decline in value of

inventories - 862 - 862

Impairment loss on advances for

purchase of right to use trademark - 7,477 - 7,477

Impairment loss on intangible assets - 16,140 - 16,140

Employee benefit obligations - 1,792 400 2,192

Tax loss carry forward - 33,812 - 33,812

Total - 60,083 400 60,483

Deferred tax liability

Amortisation gap of intangible assets - (996) - (996)

Total - (996) - (996)

Net - 59,087 400 59,487

180


Deferred tax assets have not been recognised in respect of the following items:



is appliedSeparate


(in thousand Baht)Tax losses - - 75,845Deductible temporary differences - - 2,123Total - - 77,968

As at 31 December 2013, the Company did not recognise tax losses from non-promoted business which expire in 2015 to 2018. The deductible temporary differences do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that there will be future taxable profits against which the Company can utilise the benefits therefrom.

13 Interest-bearing liabilitiesFinancial




Note 2014 2014 2013(in thousand Baht)

CurrentTrust receipts - secured 28,224 28,224 355,826Total short-term loans from financial institutions 28,224 28,224 355,826

Current portion of long-term loans from financial institutions - secured 153,841 153,841 230,805Total current 182,065 182,065 586,631

Annual Report 2014

181




is appliedSeparate

financial statementsNote 2014 2014 2013

(in thousand Baht)

Non-current

Long-term loans from financial institutions

- secured 1,780,437 1,780,437 2,350,930

Long-term loans from related parties

- unsecured 4 - - 1,000,000

Total non-current 1,780,437 1,780,437 3,350,930

Total 1,962,502 1,962,502 3,937,561

The periods to maturity of interest-bearing liabilities as at 31 December were as follows:



is appliedSeparate


(in thousand Baht)

Within one year 182,065 182,065 586,631

After one year but within five years 1,672,672 1,672,672 2,757,117

After five years 107,765 107,765 593,813

Total 1,962,502 1,962,502 3,937,561

Interest-bearing liabilities of the Company as at 31 December 2014 and 2013 were denominated entirely in Thai Baht.

The Company’s liabilities under trust receipts, machinery and equipment have been released to the Company in trust for the financial institutions. The Company is accountable to the financial institutions for such machinery and equipment.

182


Secured interest-bearing liabilities as at 31 December were secured on the following assets:



is appliedSeparate


(in thousand Baht)

Property, plant and equipment 11 4,059,619 4,059,619 2,157,339

Total 4,059,619 4,059,619 2,157,339

Long-term loans from financial institutions

As at 31 December 2014, the Company entered into significant secured long-term loan agreements with financial institutions as follows:

The first financial institution

Borrowingagreement

Approved credit

facilities

Carrying amount as at 31

December 2014

Interest rate(% per annum)

Term ofpayment

Number 1 dated 29 March 2011 and addendum to the loan agreement dated 4 April

2012

691.0

million Baht

- Interest from the signing date of the loan agreement to 31 December 2012 at the rate of 4% per annum, from 1 January 2013 to 31 March 2015 at the rate of MLR minus 2.37% per annum and subsequently at the rate of MLR minus2.12% per Annum

Monthly, repayable in 9 years and the first installment is due in April 2014

Number 2 dated 11 October 2011

437.5

million Baht

- Interest from the drawdown date to 31 March 2014 at the rate of MLR minus 2.37% per annum and subsequently at the rate of MLR minus 2.12% per annum


Annual Report 2014

183


Borrowingagreement

Approved credit

facilities


December 2014

Interest rate(% per annum)

Term ofpayment

Number 3 dated 4 April 2012

972.0million Baht

400.0million Baht

Interest from the drawdown date to 31 December 2012 at the rate of 4% per annum, from 1 January 2013 to 31 March 2015 at the rate of MLR minus 2.37% per annum and subsequently at the rate of MLR minus 2.12% per annum


Number 4 dated 20 July 2012

224.0million Baht

- Interest from the drawdown date to 31 March 2015 at the rate of MLR minus 2.37% per annum and subsequently at the rate of MLR minus 2.12% per annum


Number 5 dated 14 October 2014

600.0million Baht

15.5million Baht

Interest rate is 6 months BIBOR rate plus 1.25% per annum

Monthly, repayable in 7 years and the first installment is due in October 2015

In April 2014, the Company repaid long-term loans agreements number 1, number 2 and number 4 with the fund proceeds from the initial public offering.

As security for its borrowings, the Company must mortgage/pledge land and construction thereon, machinery and equipment of the factory, and land and construction thereon of related parties, including personal guarantees of some directors of the Company, and a related party, as collateral against loans from financial institution. On 13 November 2013, the Company mortgaged its assets amounting to Baht 2,860.5 million with the first financial institution to secure the loan obligation as prescribed under the long-term loan agreements.

184


Under the long-term loan agreements, the Company must be in compliance with the debt covenants and maintain the required financial ratios and other terms as stated in the agreements, such as Tan Passakornnatee and his family must maintain his shareholding at not less than 30% of the authorised share capital and restrictions on dividend distributions if DSCR is less than 1.25.

The second financial institution

Borrowingagreement

Approved credit

facilities


December 2014Interest rate

(% per annum)Term ofpayment

Number 1 dated 12 July 2013 and addendum to the loan agreement dated 26 August 2014

1,300.0million Baht

1,000.0million Baht

Interest for the first to the second year at MLR minus 2.625% per annum and subsequently at MLR minus 2% per annum.

Monthly, repayable in 7 years and the first installment is due in January 2016

As security for its borrowings, the Company must mortgage/pledge land and construction thereon, machinery and equipment of the factory, including personal guarantees of some directors of the Company.

Under the long-term loan agreements, the Company must be in compliance with the debt covenants and maintain the required financial ratios and other terms as stated in the agreements, such as Tan Passakornnatee and his family must maintain his shareholding at not less than 30% of the authorised share capital and restrictions on dividend distributions if DSCR is less than 1.25.

The third financial institution

Borrowingagreement

Approved credit

facilities


December 2014Interest rate

(% per annum)Term ofpayment

Number 1 dated 20 August 2013

770.0million Baht

518.8million Baht

Interest rate is 6 months BIBOR rate plus 1.25% per annum

Quarterly, repayable in 5 years and the first installment is due in February 2014

Annual Report 2014

185


As security for its borrowings, the Company must mortgage/pledge land and construction thereon, machinery and equipment of the factory, and land and construction thereon of related parties, including personal guarantees of some directors of the Company and a related party. On 2 August 2013, the Company registered a second mortgage of land with the third financial institution to secure these loan obligations for credit facilities of Baht 20 million.

Interest rates

Interest rates as at 31 December 2014 and 2013 were as follows:

Financial statements in whichthe equity method is applied/Separate financial statements

2014 2013

(% per annum)

Short-term loans from financial institutions 3.09 - 3.40 3.30 - 5.00

Long-term loans from related parties - 4.00

Long-term loans from financial institutions 3.53 - 4.88 3.92 - 4.89

Unutilised credit facilities

As at 31 December 2014 the Company had unutilised credit facilities totaling Baht 1,356.3 million (2013: Baht 2,166.9 million).

14 Trade accounts payable



is appliedSeparate


(in thousand Baht)

Other parties 519,325 519,325 288,858

Total 519,325 519,325 288,858

186


The currency denomination of trade accounts payable as at 31 December was as follows:



is appliedSeparate


(in thousand Baht)Thai Baht (THB) 485,011 485,011 288,858United States Dollars (USD) 34,314 34,314 -Total 519,325 519,325 288,858

15 Employee benefit obligationsFinancial




2014 2014 2013(in thousand Baht)

Statement of financial position obligations for:Post-employment benefits 10,960 10,960 7,681Total 10,960 10,960 7,681



is appliedSeparate


(พันบาท)Statement of comprehensive income:Recognised in profit or loss:Post-employment benefits 3,279 34Total 3,279 34

Annual Report 2014

187




is appliedSeparate


(in thousand Baht)

Recognised in other comprehensive

income:

Actuarial losses recognised in the year - - 2,002

Cumulative actuarial losses recognised 2,002 2,002 2,002

The Company operate a defined benefit pension plan based on the requirement of Thai Labour Protection Act B.E. 2541 (1998) to provide retirement benefits to employees based on pensionable remuneration and length of service.

The statement of financial position obligation was determined as follows:



is appliedSeparate


(in thousand Baht)

Present value of unfunded obligations 10,960 10,960 7,681

Statement of financial position obligation 10,960 10,960 7,681

188


Movement in the present value of the defined benefit obligations



is appliedSeparate


(in thousand Baht)

Defined benefit obligations

at 1 January 7,681 7,681 5,645

Current service costs and interest 3,279 3,279 1,557

Curtailment gain - - (1,523)

Actuarial losses in other comprehensive

income - - 2,002

Defined benefit obligations at 31 December 10,960 10,960 7,681

Expense recognised in profit or loss (note 19 to the financial statements)



is appliedSeparate


(in thousand Baht)

Current service costs 2,949 1,326

Interest on obligation 330 231

Curtailment gain - (1,523)

Total 3,279 3,279 34

Annual Report 2014

189


The expense is recognised in the following line items in the statement of comprehensive income:



is appliedSeparate


(in thousand Baht)Cost of sale of goods 757 757 362Administrative expenses 2,192 2,192 (559)Finance costs 330 330 231Total 3,279 3,279 34

Actuarial losses recognised in other comprehensive income:



is appliedSeparate


(in thousand Baht)Included in retained earnings:At 1 January 2,002 -Recognised during the year - 2,002At 31 December 2,002 2,002 2,002

Principal actuarial assumptions at the reporting date (expressed as weighted averages):



is appliedSeparate


(in thousand Baht)Discount rate 4.3 4.3 4.3Future salary increases 8-10 8-10 8-10

Assumptions regarding future mortality are based on published statistics and mortality tables.

190


16 Share capital

Par value per share

2014 2013Numberof shares Amount

Numberof shares Amount

(in Baht) (thousand shares/thousand Baht)

Authorised

At 1 January

- ordinary shares 1 1,300,000 1,300,000 - -

At 1 January

- ordinary shares 100 - - 10,000 1,000,000

Reduction in par value

- from Baht 100 to Baht 1 1 - - 1,000,000 1,000,000

Issue of new shares 1 - - 300,000 300,000

At 31 December

- ordinary shares 1 1,300,000 1,300,000 1,300,000 1,300,000

Issued and paid-up

At 1 January

- ordinary shares 1 1,000,000 1,000,000 - -

At 1 January

- ordinary shares 100 - - 10,000 1,000,000

Reduction in par value

- from Baht 100 to Baht 1 1 - - 1,000,000 1,000,000

Issue of new shares 1 300,000 300,000 - -

At 31 December

- ordinary shares 1 1,300,000 1,300,000 1,000,000 1,000,000

The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.

Annual Report 2014

191


Reduction of par value and increase in authorised share capital

At the extraordinary meeting of the shareholders of the Company held on 3 July 2013, the shareholders approved the reduction of the par value from Baht 100 to Baht 1 and the increase in the authorised share capital of Baht 300 million (from Baht 1,000 million to Baht 1,300 million) by issuing 300 million ordinary shares at Baht 1 par value for the Initial Public Offering (“IPO”). The Company registered the par value reduction and the capital increase with the Ministry of Commerce on 11 July 2013, and approved the listing of its ordinary shares on the Stock Exchange of Thailand.

Initial public offering

In April 2014, the Company offered its ordinary shares to the initial public offering (“IPO”) by issuing 300 million common shares. The new shares were sold to the subscribers at a price of Baht 13 per share (Baht 1 paid in capital and Baht 12 share premium) totalling Baht 3,900.0 million (share premium of Baht 3,600.0 million). The Company registered the increase in paid-up share capital with the Ministry of Commerce on 17 April 2014 and the shares of the Company began trading in the Stock Exchange of Thailand on 21 April 2014. Expenses directly attributable to the initial public offering amounting to Baht 84.6 million were debited to the share premium associated with the IPO (share premium - net of Baht 3,515.4 million).

Share premium

Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account (“share premium”). Share premium is not available for dividend distribution.

Share-based payments

In November 2013, management was informed that a major shareholder of the Company had entered into agreements for the sale and purchase of a portion of his personally owned shares with employees and had granted the rights to acquire his personally owned shares to a group of business partners during the period 2010 to 2013 for consideration equivalent to share par value. The grant dates are the same as the exercise dates. These transactions are considered to be share-based payment transactions. Therefore, the Company is required to measure the fair value of the employees’ and business partners’ rights to acquire the shares at grant dates based on the underlying fair value of the shares and the consideration payable and to recognise related expenses, with a corresponding increase in equity in accordance with TFRS 2.

The estimated fair values of each share at the grant dates were based on calculations performed by a qualified independent valuer using the Discounted Cash flows model (DCF) excluding expected dividends that were incorporated into the measurement of fair value. The key financial assumptions used were the Weighted Average Cost of Capital (WACC) rates of 10% to 13% per annum, the Terminal Growth rate at 3% per annum and sales growth rate which was calculated from the Compounded Annual Growth Rate (CAGR) of tea market during the years 2009 to 2012.

192


The fair value of the shares and exercise price at the grant dates and total number of shares in each year were as follows:

Grant date Fair value Exercise priceNumber of

shares(in Baht) (in thousand shares)

1 October 2010 - 31 December 2010 0.7 1 8,144

1 January 2011 - 31 December 2011 0.7 1 59,664

1 January 2012 - 31 December 2012 5.6 1 9,416

1 January 2013 - 21 May 2013 9.5 1 1,502

In July 2013, the Company had decreased the par value of the Company’s shares. Consequently, the Company has restated the par value of ordinary shares from Baht 100 to Baht 1 to use in the computation of fair value, assuming the reduction in par value occurred at the beginning.

The Company has recognised the related expenses in the financial statements for the year ended 31 December 2013 amounting to Baht 12.8 million as “employee benefit expenses and expenses for share-based payment transactions with business partners” with a corresponding increase in equity as “surplus on share-based payment transactions” at the same amount.

17 ReservesReserves comprise:

Appropriations of profit and/or retained earnings

Legal reserve

Section 116 of the Public Companies Act B.E. 2535 requires that a public company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward, to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.

Other components of equity

Currency translation differences

The currency translation differences account within equity comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

Annual Report 2014

193


18 Segment informationReportable segment

Management considers that the Company operates in a single line of business, namely the Beverage business, and has, therefore, only one reportable segment.

Geographical information

Management considers that the Company is managed and operates principally more than 99% in Thailand. There is no material revenues derived from, or assets located in, foreign countries.

Major customer

Revenues from one customer of the Company represents approximately Baht 5,090 million (2013: Baht 4,935 million) of the Company’s total revenues.

19 Employee benefit expensesFinancial




Note 2014 2014 2013

(in thousand Baht)

Salaries and wages 167,843 167,843 133,315

Expenses for share-based payment

transactions 16 - - 9,364

Defined benefit plan 15 3,279 3,279 34

Defined contribution plan 2,825 2,825 2,318

Others 12,864 12,864 8,082Total 186,811 186,811 153,113

194


Defined contribution plan

The defined contribution plan comprise provident fund established by the Company for its employees. Membership to the fund is on a voluntary basis. Contributions are made monthly by the Company and employees each at the rates ranging from 2% to 5% of their employees’ basic salaries. The provident fund is registered with the Ministry of Finance as juristic entity and is managed by a licensed Fund Manager.

20 Expenses by natureThe statement of comprehensive income includes an analysis of expenses by function. Expenses by nature disclosed in accordance with the requirements of various TFRS were as follows:



is appliedSeparate


(in thousand Baht)

Included in cost of sale of goods:

Changes in inventories of finished goods (210,149) (210,149) 96,827

Raw materials and supplies 3,445,493 3,445,493 3,669,722

Depreciation and amortisation 358,520 358,520 256,021

Utility expenses 203,857 203,857 161,059

Employee benefit expenses 16 102,841 102,841 78,889

Distribution and transportation expenses 43,691 43,691 61,419

Others 120,951 120,951 101,093

Total 4,065,204 4,065,204 4,425,030

Included in selling expenses:Advertising and sales promotion expenses 705,507 705,507 889,966

Entrance and other service fees 36,139 36,139 9,822

Distribution and transportation expenses 32,534 32,534 31,403

Total 774,180 774,180 931,191

Annual Report 2014

195




is appliedSeparate


(in thousand Baht)Included in administrative expenses:Impairment loss 11 121,495 121,495 -Employee benefit expenses 16 83,640 83,640 73,993Expenses for share-based payment transactions with business partners 16 - - 3,203Education, sports and other donations 1,130 1,130 5,643Depreciation and amortisation 11,395 11,395 11,130Others 32,758 32,758 36,379Total 250,418 250,418 130,348

21 Finance costsFinancial




Note 2014 2014 2013(in thousand Baht)

Interest expense:Related parties 4 11,726 11,726 42,096Financial institutions 103,098 103,098 125,093Total interest expense 114,824 114,824 167,189Transaction costs and others 330 330 231Total 115,154 115,154 167,420Less amounts included in the cost of qualifying assets - Property, plant and equipment under construction 10 (15,739) (15,739) (5,802)Net 99,415 99,415 161,618

196


22 Income taxIncome tax recognised in profit or loss



is appliedSeparate


(in thousand Baht)

Current tax expense

Current year - - -

Deferred tax expense 12

Movements in temporary differences (25,275) (25,275) -

Tax loss carry forward (33,812) (33,812) -

Total (59,087) (59,087) -

Income tax recognised in other comprehensive income



is appliedSeparate


(in thousand Baht)

Defined benefit plan actuarial losses (400) (400) -

Total 12 (400) (400) -

Annual Report 2014

197


Reconciliation of effective tax rate

Financial statementsIn which the equity method is applied

2014

Rate (in thousand

(%) Baht)

Profit before income tax expense 1,019,674

Income tax using the Thai corporation tax rate 20 203,935

Income not subject to tax (169,444)

Expenses not deductible for tax purposes 1,621

Expenses that are deductible for tax purposes (17,631)

Recognition of previously unrecognised tax losses (77,568)

Total (6) (59,087)

Separate financial statements2014 2013

Rate (in thousand Rate (in thousand

(%) Baht) (%) Baht)

Profit before income tax expense 1,019,647 883,655

Income tax using the Thai corporation

tax rate (169,438) (196,247)

Income not subject to tax 1,621 5,977

Expenses not deductible for tax purposes (17,631) -

Recognition of previously unrecognised

tax losses (77,568) -

Unrecognised tax losses - 13,539

Total (6) (59,087) - -

198


Income tax reduction

Royal Decree No. 530 B.E. 2554 dated 21 December 2011 grants a reduction in the corporate income tax rate for the three accounting periods 2012, 2013 and 2014; from 30% to 23% for the accounting period 2012 which begins on or after 1 January 2012 and to 20% for the following two accounting periods 2013 and 2014 which begin on or after 1 January 2013 and 2014, respectively. Royal Decree No. 577 B.E. 2557 dated 10 November 2014 extends the reduction to 20% for the accounting period 2015 which begins on or after 1 January 2015.

The Company has applied the reduced tax rate of 20% in measuring deferred tax assets and liabilities as at 31 December 2014 and 2013 in accordance with the clarification issued by the FAP in 2012.

23 Promotional privilegesBy virtue of the provisions of the Industrial Investment Promotion Act of B.E. 2520, the Company has been granted privileges by the Board of Investment relating to manufacture of beverages from plants, vegetables or fruits in pack. The privileges granted include:

(a) exemption from payment of import duty on machinery approved by the Board;

(b) exemption from payment of corporate income tax on net profit of the promoted business for certain periods and conditions as stipulated in the promotional certificates; and

(c) exemption to include the dividend income from the promoted business in the computation of corporate income tax throughout the period the Company being granted exemption.

As promoted companies, the Company must comply with certain terms and conditions prescribed in the promotional certificates.

Summary of revenue from promoted and non-promoted businesses:

Financial statements in which the equity method is applied / Separate financial statements

2014 2013

Promotedbusinesses

Non-promoted

businesses TotalPromoted

businesses

Non-promoted

businesses Total(in thousand Baht)

Local sales 4,587,397 1,572,080 6,159,477 4,692,375 1,763,903 6,456,278

Export sales 17,788 1,815 19,603 16,681 11,416 28,097

Total revenue 4,605,185 1,573,895 6,179,080 4,709,056 1,775,319 6,484,375

Annual Report 2014

199


24 Basic earnings per shareThe calculations of basic earnings per share for the years ended 31 December 2014 and 2013 were based on the profit for the years attributable to ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding during the years as follows:



is appliedSeparate


(in thousand Baht)

Profit attributable to ordinary shareholders

of the Company (basic) 1,078,761 1,078,734 883,655

Number of ordinary shares outstanding

at 1 January 1,000,000 1,000,000 1,000,000

Effect of shares issued during the year 212,877 212,877 -

Weighted average number of ordinary

shares outstanding (basic) 1,212,877 1,212,877 1,000,000

Earnings per share (basic) (in Baht) 0.89 0.89 0.88

25 DividendsAt the meeting of the Board of Directors of the Company held on 13 August 2014, the Board of Directors approved the appropriation of interim dividend of Baht 0.50 per share, amounting to Baht 650 million. The dividend was paid to shareholders on 12 September 2014.

26 Financial instrumentsFinancial risk management policies

The Company is exposed to normal business risks from changes in market interest rates and currency exchange rates and from non-performance of contractual obligations by counterparties. The Company does not hold or issue derivative financial instruments for speculative or trading purposes.

200


Risk management is integral to the whole business of the Company. The Company has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Company’s risk management process to ensure that an appropriate balance between risk and control is achieved.

Capital management

The Board of Directors’ policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board monitors the return on capital, which the Company defines as result from operating activities divided by total shareholders’ equity, and also monitors the level of dividends to ordinary shareholders.

Interest rate risk

Interest rate risk is the risk that future movements in market interest rates will affect the results of the Company’s operations and its cash flows. The Company is primarily exposed to interest rate risk from its borrowings (note 13 to the financial statements).

The effective interest rates of interest-bearing financial liabilities as at 31 December and the periods in which those liabilities mature were as follows:

Interest rate



Within1 year

After 1 yearbut within

5 yearsAfter

5 years Total(% per annum) (in thousand Baht)

2014

Current

Short-term loans from

financial institutions Market rate 28,224 - - 28,224

Current portion of 6 months

long-term loans BIBOR plus

1.25 153,841 - - 153,841

Annual Report 2014

201


Interest rate



Within1 year


5 yearsAfter


Non-currentLong-term loans from

financial institutions MLR minus

2.625, MLR

minus 2 and

MLR minus

2.12 and

6 months

BIBOR plus - 1,672,672 107,765 1,780,437

Total 1.25 182,065 1,672,672 107,765 1,962,502

Interest rate



Within1 year


5 yearsAfter


2013

Current Short-term loans from

financial institutions Market rate 355,826 - - 355,826

Current portion of MLR minus

long-term loans 2.37 and

6 months

BIBOR plus

1.25 230,805 - - 230,805

202


Interest rate



Within1 year


5 yearsAfter


Non-current

Long-term loans from MLR minus

financial institutions 2.37, MLR

minus 2.12

and 6 months

BIBOR plus

1.25 - 1,757,117 593,813 2,350,930

Long-term loans from

related parties 4 - 1,000,000 - 1,000,000

Total 586,631 2,757,117 593,813 3,937,561

Management believes that such interest rate risk is minimal.

Foreign currency risk

The Company is exposed to foreign currency risk relating to purchase and sale which are denominated in foreign currencies. However, as at 31 December 2014 and 2013 the Company does not have material foreign currency risk.

Annual Report 2014

203


At 31 December, the Company was exposed to foreign currency risk in respect of financial assets and liabilities denominated in the following currencies:



is appliedSeparate


(in thousand Baht)United States DollarsTrade accounts payable 14 34,314 34,314 -Payables on purchase of property, plant and equipment 9,707 9,707 23,720

44,021 44,021 23,720

Japanese YenPayables on purchase of property, plant and equipment 150 150 44,782

150 150 44,782

Statement of financial position exposure 44,171 44,171 68,502

Credit risk

Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Company as and when they fall due.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. At the reporting date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. However, management does not anticipate material losses from its debt collection.

Liquidity risk

The Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Company’s operations and to mitigate the effects of fluctuations in cash flows.

204


Denomination of fair values

The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Since the majority of the financial assets and liabilities classified as short-term and loans are bearing interest at rates based on current market rates, the management believes that at 31 December 2014 and 2013, the carrying value of the Company’s financial statements does not materially differ from their aggregate fair value.

27 Commitments with non-related parties



is appliedSeparate


(in thousand Baht)

Capital commitments

Contracted but not provided for:

Property, plant and equipment 307,691 307,691 1,081,176

Total 307,691 307,691 1,081,176



is appliedSeparate


(in thousand Baht)

Non-cancellable operating lease

commitments

Within one year 13,918 15,073

After one year but within five years 5,136 13,375

Total 19,054 19,504 28,448

Annual Report 2014

205


The Company has lease agreements with local companies covering office premises including facilities and others for periods of 1 to 4 years expiring in 2015 to 2016.



is appliedSeparate


(พันบาท)Other commitmentsUnused letters of credit 369,257 886,114Purchase orders for goods and supplies 57,259 135,143Total 426,516 426,516 1,021,257

Letter of guarantee

The Company had commitment to a financial institution for letter of guarantee issued by the financial institution in favor of a state enterprise of Baht 5.5 million (2013: Baht 5.5 million).

Significant agreements with non-related parties

Supply agreements

The Company has supply agreements with local companies. Under the terms of the agreements, the Company agrees to purchase raw material for production of packaging according to the quantity required at the price specified in the agreements. These agreements shall be in effect until 31 December 2016 with the renewal option.

Product distribution agreements

The Company has two production distribution agreements with two local companies. Under the terms of the agreements, the Company agrees to pay distribution fees at the rates as specified in the agreements. The first agreement shall be in effect from 1 February 2011 to 31 January 2016 and is renewable automatically for another 3 years. The contractual parties have a right to terminate the agreement by giving advance notice of not less than 6 months prior to the expiration of the agreement. The second agreement shall be in effect from 1 November 2014 to 31 October 2017.

Natural gas purchase agreement

The Company has a natural gas purchase agreement with a local company. Under the terms of the agreement, the Company agrees to pay disbursements and comply with conditions as specified in the agreement. The agreement shall be in effect from 5 September 2011 to 31 August 2018 and is renewable by giving advance written notice of not less than 90 days prior to the expiration of the agreement.

206


Domestic transportation services agreement

The Company has a domestic transportation services agreement with a local company. Under the terms of the agreement, the Company agrees to pay disbursements and comply with conditions as specified in the agreement. The agreement shall be in effect from 1 April 2014 to 31 March 2019 and is renewable automatically for another 5 years. The contractual parties have a right to terminate the agreement by giving advance notice of not less than 6 months prior to the expiration of the agreement.

28 Events after reporting periodAt the meeting of the Board of Directors of the Company held on 25 February 2015, the Board of Directors approved the appropriation of annual dividend for the year 2014 of Baht 1.0 per share, amounting to Baht 1,300 million, which is included the interim dividend paid to shareholders on 12 September 2014 of Baht 0.50 per share, amounting to Baht 650 million. Consequently, the remaining dividend of Baht 0.50 per share, amounting to Baht 650 million, is scheduled to be paid to the Company’s shareholders on 25 May 2015. The annual dividend, however, is subject to the final approval from the shareholders of the Company.

29 Thai Financial Reporting Standards not yet adoptedA number of new and revised TFRS have been issued but are not yet effective and have not been applied in preparing these financial statements. Those new and revised TFRS that may be relevant to the Company’s operations, which become effective for annual financial periods beginning on or after 1 January 2015. The Company does not plan to adopt these TFRS early.

TFRS TopicYear

effectiveTAS 1 (revised 2014) Presentation of Financial Statements 2015

TAS 2 (revised 2014) Inventories 2015

TAS 7 (revised 2014) Statement of Cash Flows 2015

TAS 8 (revised 2014) Accounting Policies, Changes in Accounting 2015

Estimates and Errors 2015

TAS 10 (revised 2014) Events after the Reporting Period 2015

TAS 12 (revised 2014) Income Taxes 2015

TAS 16 (revised 2014) Property, Plant and Equipment 2015

TAS 17 (revised 2014) Leases 2015

TAS 18 (revised 2014) Revenue 2015

Annual Report 2014

207


TFRS TopicYear

effectiveTAS 19 (revised 2014) Employee Benefits 2015

TAS 21 (revised 2014) The Effects of Changes in Foreign Exchange Rates 2015

TAS 23 (revised 2014) Borrowing Costs 2015

TAS 24 (revised 2014) Related Party Disclosures 2015

TAS 27 (revised 2014) Separate Financial Statements 2015

TAS 28 (revised 2014) Investments in Associates and Joint Ventures 2015

TAS 33 (revised 2014) Earnings per Share 2015

TAS 34 (revised 2014) Interim Financial Reporting 2015

TAS 36 (revised 2014) Impairment of Assets 2015

TAS 37 (revised 2014) Provisions, Contingent Liabilities and Contingent 2015

Assets

TAS 38 (revised 2014) Intangible Assets 2015

TFRS 2 (revised 2014) Share-based Payment 2015

TFRS 5 (revised 2014) Non-current Assets Held for Sale and Discontinued 2015

Operations

TFRS 8 (revised 2014) Operating Segments 2015

TFRS 10 Consolidated Financial Statements 2015

TFRS 11 Joint Arrangements 2015

TFRS 12 Disclosure of Interests in Other Entities 2015

TFRS 13 Fair Value Measurement 2015

TSIC 15 (revised 2014) Operating Leases - Incentives 2015

TSIC 25 (revised 2014) Income Taxes - Changes in the Tax Status of an 2015

Entity or its Shareholders

TSIC 27 (revised 2014) Evaluating the Substance of Transactions 2015

Involving the Legal Form of a Lease

TSIC 31 (revised 2014) Revenue - Barter Transactions Involving 2015

Services Advertising

TFRIC 1 (revised 2014) Changes in Existing Decommissioning, 2015

Restoration and Similar Liabilities

208


TFRS TopicYear

effectiveTFRIC 4 (revised 2014) Determining whether an Arrangement contains 2015

a Lease 2015

TFRIC 10 (revised 2014) Interim Financial Reporting and Impairment 2015

TFRIC 13 (revised 2014) Customer Loyalty Programmes 2015

The Company has made a preliminary assessment of the potential initial impact on the financial statements in which the equity method is applied and separate financial statements of these new and revised TFRS and expects that there will be no material impact on the financial statements in the period of initial application.

2922/301-303 28th Floor. Charn Issara II Bldg., New Petchburi Rd., Bangkapi, Huaykwang, Bangkok 10310Ichitan Group Public Company Limited