Message from the Board of Directors SCG Packaging Public Company Limited

“Growth with Quality, and Readiness for Challenges”

In 2020, many countries, both in ASEAN and around the world, faced economic challenge due to the COVID-19 pandemic. The spread of the virus resulted in a decreased demand for durable goods, especially in the electrical and automotive industries. Furthermore, the demand for printing & writing paper significantly decreased, compared to the previous year. However, the demand for consumer related goods, including food and beverage and healthcare products, continued to increase, alongside E-commerce market growth. This was because consumers paid more attention on hygiene while adjusting their purchasing behaviour, buying more products through online channels.

Amid these challenges, SCGP has adapted itself to cope with the economic fluctuations by further reinforcing its integrated business model. SCGP has responded to the changes in consumer behaviour with various packaging solutions, continue to integrate its upstream and downstream products to capture business opportunities, and diversify risk to different countries and industries. SCGP believes that packaging demands show promising long-term growth potential that is supported by rising consumption and the consumer mega-trends in ASEAN. As such, SCGP aims to continue and expand its consumer-related segments which is essential to daily living and demonstrates resilient demand in most economic condition. Currently, the consumer-linked revenue contributes higher than 70% of total.

With the challenges of the COVID-19 pandemic, SCGP continues to prioritise the health, safety and occupational management of its employees, while stabilizing the supply chain of all customers and business partners, and closely monitoring and adjusting to the dynamic situation for continual business operations. These proactive actions have contributed to SCGP’s Baht 92,786 million sales revenue in 2020, increasing 4% as compared to 2019. This was driven by consumer demand of daily necessities and the financial consolidation of PT Fajar Surya Wisesa Tbk. (Indonesia) and Visy Packaging (Thailand) Co., Ltd. SCGP’s annual net profit in 2020 was Baht 6,457 million, or a 23% increase as compared to 2019. This came from our focus on offering a variety of products, services, and solutions and our ongoing cost management.

IPO success to accelerate the journey of growth

SCGP commenced trading its shares on the Stock Exchange of Thailand on 22 October 2020 with an initial market capitalisation of approximately Baht 150,000 million (at IPO price) and received about Baht 40,092 million from fundraising. These will be used for business expansion, financial restructuring and working capital. This is an important step for us to increase our growth potential, strengthen financial position to accelerate future business expansion.

Collaborating with partners to expand our packaging business to support ASEAN demand

SCGP is expanding its business and strengthening its potential to be the leader in packaging solutions in ASEAN. With its experience, expertise and collaboration with partners in different countries, SCGP pursues organic growth, such as in increasing of sales and expanding production capacity, as well as inorganic growth through merger and partnership (M&P) to create synergies with its partners.

SCGP has been expanding its production capacity in four strategic countries, with a total investment of over Baht 8,200 million. In the third quarter, SCGP commenced an additional 84 million square meters of flexible packaging per year in Tin Thanh Packing Joint Stock Company (BATICO), Vietnam. In the last quarter, SCGP acquired 94.1% shareholding in Bien Hoa Packaging Joint Stock Company (SOVI), a leading manufacturer of fiber-based packaging and a listed company on the Vietnam Stock Exchange. This helps SCGP to expand in the consumer market, which is likely to grow well. In addition, in January 2021, SCGP acquired the entire stake of Go-Pak UK Limited (Go-Pak), a leading provider of foodservice products in the UK, Europe and North America which has a production base in the south of Vietnam. In the Philippines, Rengo Co., Ltd. (Rengo) invested as joint venture partner in United Pulp and Paper Co., Inc. (UPPC), with a shareholding structure between SCGP and Rengo at 74.8% and 25.0%, respectively. These investments will strengthen SCGP's integrated packaging business in ASEAN.

Being an integral part of the daily lifestyle of customers and consumers by developing innovative products, services and solutions

SCGP focuses on working alongside with customers to help solve problems and respond to customer needs. We also strive to develop packaging solutions that are suitable for each and diverse customer through systematic work processes and professional teams with strong technical support. We have more than 500 account executives and customer service staff, 90 researchers and developers who are responsible for innovations, covering from upstream to downstream businesses, and more than 35 professional designers ready to serve customers with creativity. We also continuously invest in advanced machinery and technology to be able to produce packaging to meet consumer needs in different industries; making our packaging be a part of consumers’ everyday life.

In 2020, SCGP opened the SCGP-Inspired Solutions Studio to enhance customer experiences. The studio introduced various packaging designs, solutions and innovations to allow SCGP to meet customers’ multi-dimensional needs such as functionality, marketing needs, care for the environment, and added value to their products. SCGP successfully launched OptiSorb-X, an innovative packaging with high oxygen and moisture barrier properties in combination with oxygen absorption techniques. This helps to preserve finished product quality and extend shelf-life, which is suitable for bakery, processed meats, etc. There’s also Odorlock packaging, which solves odour problem such as durian from spreading its odour to other products, allowing those products to be transported and sold together.

Driving the organisation with good governance principles, taking care of society and the environment for sustainable growth

SCGP takes exception care of its customers, develops its human capital, and maintains involvement of all its stakeholders. We commit to ESG (Environmental, Social, and Corporate Governance) by operating our business with adherence to good governance and sustainable development principles. We also focus on environmental protection throughout the production processes, and we adopt Circular Economy principles in business practice to minimize the use of resources. An example of this is the development of alternative environmental-friendly packaging for environmentally conscious customers and the use of renewable and recyclable resources.

SCGP also looks after society while preserving the environment. For example, we ran a waste management project in the Banpong District for the second consecutive year. The project enabled 41 communities within the Ban Pong district to reduce their amounts of organic waste by more than 40%. The Banpong District is now a liveable community with a sustainable environment, being a model city for waste management for other areas. SCGP also collaborated with more than 60 partners, such as Tesco Lotus, Thai Post, Sansiri, Property Perfect etc. in a recycling campaign and promote to consumers. The group installed more than 380 paper-recycle drop points throughout Thailand.

The Board of Directors would like to express our gratitude all shareholders and other relevant parties who have always trusted and supported the Company. We would like to assure that the Company will continuously deliver business success with a good governance practice, and sustain its packaging solution leadership in the ASEAN region. SCGP will continue to embed the Circular Economy principles to enhance operational processes throughout the value chain, which is an important foundation for strengthening the business and enabling it to grow sustainably.

กรุุงเทพมหานคร วันที่ 26 มกราคม 2564

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