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Explanation and Analysis of the Management

(1) Overview of the Company and its subsidiaries.

The snack market in 2016 grew at a similar rate to the year before. The Company has implemented marketing strategies, including on products that focus on providing benefits to consumers in terms of quality, taste and nutritional value in line with the ever changing needs of the consumers, on distribution channels that facilitate consumer purchases, on efficient inventory management, on continuously organizing advertising and sales promotion activities, and on expanding new customer base.

For the tuna products and seafood products for export, the Company continues to place importance on product development, as well as use of technologies in the production of goods, and on quality management system in all production processes that are traceable for which it has received international standards certification that are recognized by customers overseas. It also emphasizes on producing products that are environmentally friendly, which allowed the Company to gain continuous trust in its products, with emphasis on the Asian, European, American, Australian and Middle Eastern markets.


(2) Results of the Operation


Net profit for the period amounted 345.1 million Baht, down from the same period last year by 88.1 million Baht from realization of share of loss of joint venture and associated companies that increased by 37.4 million Baht, income tax expenses that increased by 40.3 million Baht due to the expiration of tax incentives under the investment promotion privileges of a subsidiary, loss from change in value of current investments that decreased by 20.7 million Baht due to the reclassification of investments in open-ended equity funds to investments in available-for-sales securities.

Profit from operating activities of the Company and its subsidiaries was 521.2 million Baht, down from the same period last year by 31.7 million Baht. Significant changes in the operating performance for the period are as follows:

Distribution Segment

Net revenue from sales and services for the period was 3,148 million Baht, decreasing from the same period of the year before by 3 million Baht because during the year the Company organized sales promotion activities that correlate with sales thus causing net sales revenue to decrease. Gross profit margin was 25.7%, down from the same period of the previous year by 0.6%.

Selling expenses was 310.1 million Baht or a ratio of 9.9% to sales revenue (2015 : 11.0%), decreasing from the same period of the year before by 35.7 million Baht from the decrease in advertising expenses of 36.5 million Baht.

Administrative expenses was 172.1 million Baht, up from the same period of the previous year by 12.3 million Baht due to the increase in personnel expenses of 10.5 million Baht from the expansion of the marketing and support units together with the annual salary adjustment and  the increase in management expenses of 1.8 million Baht.

Food Production Segment

Net revenue from sales and services for the period was 2,111 million Baht, down from the same period of the year before by 132 million Baht resulting from the decrease in export of tuna products.  Gross profit margin was 14%, which compared with the same period of the previous year resulted in a profit for this segment of 287 million Baht, a decrease of 17 million Baht from the year before.

Other Revenues

Other revenues was 29.4 million Baht, increasing from the same period of last year by 9.6 million Baht due to the increase in gain from exchange rate and other income of the food production segment for the period.


Administrative Expenses

Administrative expenses for the period was 298.9 million Baht, up from the same period of the previous year by 33.1 million Baht due to the increase in personnel related expenses of 22.7 million Baht from the expansion of the marketing and support units of the distribution segment together with the annual salary adjustment, increase in consulting fees of 4.8 million Baht, increase in rental and repair expenses of 1.6 million Baht, increase in donations of 1.3 million Baht, increase in travel expenses of 1.0 million Baht and increase in other expenses of 1.7 million Baht.


(3) Financial Position


Total assets of the Company and its subsidiaries as at 31 December 2016 amounted to 2,558.8 million Baht, an increase from the end of the year 2015 of 42.9 million Baht with the following changes:

Current assets decreased by 222.7 million Baht.

This resulted from net cash flows for the period decreasing by 27.5 million Baht, short-term investments decreasing by 366.1 million Baht from the reclassification of current investments to investments in available-for-sales securities of 226.7 million Baht, trade receivables increasing by 49.2 million Baht, inventories increasing by 43.6 million Baht from the increase in finished goods for both the consumer products distribution business and production for export business with average inventory period of 9.2 days and inventory turnover ratio of 39.03 times, loan to joint venture company increasing by 58.5 million Baht for use as working capital in purchasing agricultural products, and asset held for sale of 17.2 million Baht that resulted from the reclassification of investment in associated company to asset held for sale in accordance with the resolution of the Board of Directors to divest all the ordinary shares held.

Non-current assets was 1,238.1 million Baht, up from the same period of the previous year by 265.6 million Baht.

This resulted from long-term investments increasing by 100.5 million Baht from investment in debentures with maturity of 7 years, investment in available-for-sale securities increasing by 252.4 million Baht from the reclassification of investments and the increase in value of the securities in the period, investment in associated company decreasing by 67.5 million Baht from the reclassification to assets held for sale, investment in joint venture company decreasing by 8.0 million Baht, and deferred tax assets decreasing by 14.7 million Baht from the decrease in accumulated tax losses.

Total liabilities of the Company and its subsidiaries as at 31 December 2016 amounted to 786.3 million Baht, down from the end of the year 2015 by 35.1 million Baht due to the decrease in liabilities under finance lease agreements of 19.2 million Baht and decrease in income tax payable of 2.9 million Baht while trade and other payables increased by 38.8 million Baht, deferred tax liabilities increased by 9.7 million Baht, and provision for long-term employee benefits increased by 8.4 million Baht.

Total shareholders’ equity of the Company and its subsidiaries as at 31 December 2016 amounted to 1,772.5 million Baht, increasing from the end of the previous year by 7.8 million Baht with profit for the period of 345.1 million Baht and share of profit from investment in associated company of 2.4 million Baht less dividends paid for the period of 364.8 million Baht and other components of the shareholders’ equity that increased by 25.2 million Baht from the increase in value of investments in available-for-sale securities.