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Message from the Chairman

Dear Shareholders,

2012 marks another year of success for Thai Beverage Public Company Limited. Once again, we achieved the outstanding performance, both the top line as well as bottom line. Our remarkable growth is derived from the increase of sales of all our business units, our ability to secure the leading position in the alcohol beverage market, and our continuous expansion of non-alcohol beverage business by the leverage of the extensive distribution network nationwide.

In 2012, ThaiBev Group achieved the net profit of Baht 28,760 million, an increase of 140.3 percent or Baht 16,793 million, when compared to the previous year. The exceptional performance reflects our leadership in the beverage market. I am delighted that our management team and staffs continue to deliver healthy and robust operating results, as well as contribute to continuous dividend payment for our shareholders. Based on the 2012 performance, the dividend payment of ThaiBev was a total of Baht 10,546 million, or Baht 0.42 per share.

Our alcohol business has successively expanded, especially in the spirits segment where both our white and brown spirits have been recognized as established brands. We have made further strides to strengthen our brands. In 2012, we organized domestic and overseas marketing activities with focus on modification and premiumization of Mekhong, Blend 285, and Sangsom brands.

This year, we continued to strengthen our presence in the non-alcohol business. We once again introduced the latest innovation in the green tea beverage market i.e. Oishi green tea in returnable glass bottle, making us the very first to pioneer in this segment. In late 2012, we launched top-quality carbonated beverage under the brand “est” to penetrate consumption at food shops, restaurants, and groceries via the solid and extensive distribution network across Thailand.
Our innovations have enjoyed positive feedbacks from consumers and our trade partners. The Company will continue to develop more products to serve the demands of the market with an aim of securing our leading position in the beverage business.

The commencement of ASEAN Economic Community or AEC in 2015 presents a great opportunity for us to expand our business from the existing 65 million consumers in Thailand to serve the demands of over 600 million consumers and trade partners in the near future. The Company sees many business opportunities and continues to expand as per the proactive business plan for the ASEAN market. Our longstanding experience of over three decades and various awards we have received from national and international institutions are the guarantee of our success and readiness to take on leadership as well as to bring Thai products to ASEAN and global markets in order to enhance the reputation of Thailand and generate more revenues for the country.

A major milestone in 2012 is our investment in shares of Fraser and Neave, Limited, which is a leading company in the region engaging in production and distribution of beverage, as well as many businesses, with established proven track of success. This, again, emphasizes on our determination to expand into ASEAN, which is among the fastest-growing economies, as well as our strategy to grow the non-alcohol beverage business.

Apart from our preparation of readiness for ASEAN market in respect of policy and management team, we place great emphasis on continuous development of our people. ThaiBev enhances efficiency of employees and steers them to move forward in the same direction through provision of training programs and up-to-date information.

On this occasion, I would like to convey my sincere appreciation to the management team of the Company for their achievement of satisfactory growth of the Company in 2012, and all our staffs for their perseverance, industriousness, and dedication in being a part of the key force to drive our business forward, as well as all stakeholders. I believe that such combination builds a solid platform for ThaiBev to achieve sustainable development in the future.

On behalf of the Board of Directors and management, I would like to thank our shareholders for the trust and confidence you have given us all these years.

Charoen Sirivadhanabhakdi
Chairman of the Board

CEO Talk

Dear Shareholders,

It is my pleasure to announce that ThaiBev ended the year 2012 with outstanding operating results. ThaiBev Group generated total revenues of Baht 161,044 million, or an increase of 21.8 percent. Net profit was Baht 28,760 million, or over 140.3 percent growth when compared to the year 2011. Sales continued to rise as a result of our leadership in the domestic beverage business as well as our strength in terms of production facilities and the extensive distribution network.

In early 2012, ThaiBev expedited recovery of our production bases which were damaged from the flood disaster in late 2011, which enabled our facilities to quickly resume normal operations. In addition, the Company saw the risks from flood disasters and therefore; relocated certain production bases from areas where the Company considered as high-risk zones. The flood prevention system was installed at non-relocated facilities, which were significantly impacted during the flood, to build confidence in respect of the operations in the future.

ThaiBev emphasizes on maintaining the leadership in the spirits business through continuous brand investments. In the previous year, the Company
re-defined positioning of the brands and target groups to distinguish attributes of each brand along with brand identity development. Related marketing activities were specifically designed for each brand to accentuate its character for them to better serve the demands of target consumers. The Company rebranded and re-positioned Mekhong, the first spirits brand in Thailand with over 200 years legacy, to be a premium brand in preparation for the full-scale penetration in domestic market and expanding its presence in overseas. The spirits business in 2012 encountered the challenge of the excise tax increase imposed on certain types of spirits. However, the strength of our brands, dedication of the sales team, and effective cost management enabled sales to recover to the normal level within a short period. Total sales growth of the spirits business in 2012 was 9.9 percent and net profit rose to 40.4 percent.

The integration of Sermsuk Public Company Limited (“Sermsuk”) to ThaiBev Group through acquisition in late 2011 strengthened our distribution network. This leverages our business, especially in respect of non-alcohol beverage distribution and the expansion to the carbonated soft drink sector, which is the largest non-alcohol beverage market in Thailand. In 2012, Sermsuk launched carbonated soft drink product under the brand “est”, which is its own trademark. “est” comes in a variety of flavors, including cola, strawberry flavor, cream soda flavor, orange flavor, and lemon lime flavor.
The Company was ready to roll out full-scale market penetration through continuous marketing activities and distribution of the beverage in various sizes and packaging. Furthermore, the distribution network of Sermsuk was one of the keys for Oishi to expand business to a new market through the launch of the eco-friendly packaging i.e. the returnable bottle under the name “Oishi returnable bottle”.

With regards to the food business, Oishi has expanded from its existing business comprising food, sandwiches, and frozen food as it ventured into the snack business in 2012. Oishi launched the Japanese-style fried seaweed under the brand “Onori” with the aim to enhance its potential and further diversify its products to cover all product lines in the food business.

Along with strengthening our domestic business, ThaiBev focuses on building growth through overseas expansion. Our major movement in 2012 is the investment in shares of Fraser and Neave, Limited (“F&N”), which made F&N an associate company of ThaiBev Group. F&N is highly recognized as a leading conglomerate in Singapore with over 130-year history; and it is the owner of various renowned brands. The Company considered that the investment in F&N would create synergy for its beverage business in alignment with the long-term strategy.

Late in 2012, the Stock Exchange of Thailand participated in the ASEAN Trading Link, which connects the securities trading systems in ASEAN countries and enables convenient overseas securities trading for investors. Such operation provides an additional investment channel for Thai and Malaysian investors who are interested in shares of ThaiBev and other listed companies in Singapore.

With clear vision and business goals, ThaiBev Group has seen continuous growth; and the number of our people has increased accordingly. The Company places importance on human resources, which have been among key mechanisms of our success. ThaiBev’s theme for 2012 was the Year of Efficiency. We focused on increasing the efficiency of our people in three key aspects i.e. Faster Speed — the faster adaptation to changes; Better Result — the improvement of work process for higher efficiency; and Cost Saving — the optimization of resources.

Our success in 2012 was the result of devoted contribution from our people in every function. I would like to take this opportunity to thank our shareholders, trade partners, committee, executives, and employees for your determination and dedication, physically and mentally, for the Company. Together, we shall continue to enjoy stable growth under good corporate governance and with social accountability, which will bring about maximized benefits for our stakeholders.

Thapana Sirivadhanabhakdi
President and CEO

As of date 30/4/2013