Background and Major Developments
Carabao Tawandang Company was established and incorporated on 22nd August 2001 in order to conduct its major business of manufacturing and distributing energy drinks under the name “Carabao Dang” along with other beverages. The initial capital at the time of its incorporation was one million Baht. Carabao Tawandang Co. Ltd. launched its energy drink products under the "Carabao Dang" trademark on 28th October 2002. The name “Carabao Dang” comes from the Group’s association with the band “Carabao”, combined with German Tawandang Brewery Restaurant and is marketed with the slogan “ Carabao Dang: The Fighting Spirit.”
With the continual and consistent growth of the business, the group of shareholders foresaw the need to expand our strategies for an integrated business model, ranging from the production and marketing to the distribution of energy drinks and other beverages to the consumers satisfaction.
The Company was registered as a limited company in Thailand on 28 August 2013, and registered its conversion to a public limited company on 8 July 2014. As of now we are ready to be listed in the Stock Exchange of Thailand on November 21, 2014.
The business vision of Carabao Group Public Company Limited (CBG or the Group ) and its subsidiaries, which consist of
- Carabao Tawandang Co., Ltd.
( CBD )
- Tawandang DCM Co., Ltd.
( DCM )
- Asia Pacific Glass Co., Ltd.
( APG )
- INTERCARABAO LIMITED
( ICUK )
Major Developments of the Group
CBD initiated the project for a new bottling factory and invested in installing 2 new production line machines in Bang Pakong, Chachoengsao province according to the approval of the Company’s board meeting on 22 April 2017 which will increase manufacturing installed capacities to 1.8 billion bottles per annum and will start all commercial production in the 1st quarter of 2018.
The Company and DAI GROUP signed a contract for joint venture according to the approval of the Company’s board meeting on 22 April 2017 to establish joint venture companies overseas. The aim was to conduct business in marketing, selling, and distributing energy drinks and other drinks under the brand Carabao and/or any other brands developed or acquired by the joint venture company for the market in Greater China including Hong Kong, Macao, Taiwan, and China with the ratio of shareholding at 47% and 48% respectively. The other 5% shares in the joint venture under the investment in conducting business in the Greater China belonged to Chinese executive officers who were knowledgeable, talented, and experienced in management, marketing, sales, and distribution for energy drinks under the product brand that had been leading the Chinese market for more than 20 years (“The Project of Establishment of Joint Venture Companies for Investments in Greater China Region”). Business plans and performance estimates of the project had been improved substantially meaning that it had been enhanced from policy of focused marketing in designated cities to an aggressive marketing strategy which had target groups all over China or mass marketing which required a substantial amount of capital for the budget in marketing and promoting. The Company believed that the enhanced business plans can increase the business success rate by increasing sales that have high expansion rate and yield decent returns from investments in the long term. In case of the Company’s decision in investing in the project, the Company will run the risk of realizing loss in accordance with the high stake in the joint venture which may substantially affect the performance and financial status of the Company as a whole and subsidiary companies’ in the first 4-5 years of operating under the project.
Hence, the Company’s board meeting on 25 April 2017 approved the pulling out from investing in the project, at the same time the major shareholders of the Company namely Mr. Sathien Setthasit and Ms. Nutchamai Thanombooncharoen and Mr. Yuenyong Opakul and those involved (called together as “the major shareholders”) notified that they wished to establish a new company to invest in project in the Company’s place (“HOLDING SPV”). The major shareholders will hold more than half of the stocks from the registered capital for HOLDING SPV. The Company and its subsidiaries still hold the financial benefits from the project, which could be summarized as follow:
- CBD gained the benefits of manufacturing and exporting energy drinks under the brand Carabao to the joint venture for marketing, sales, and distribution to consumers in Greater China from the fact that CBD signed a contract with the joint venture which specified scope of duties and rights of the joint venture in being the sole distributor of the energy drinks under the brand Carabao in Greater China.
- The Company may consider to invest by holding stocks in the joint venture under the project in the future from the Company’s rights to buy all of the stocks in HOLING SPV (“stocks involved”) under the conditions of stocks trades that were agreed upon under the contract of the rights to purchase stocks involved including but not exclusive to (1) exercising the rights to purchase stocks involved at any time if the Company deems the performance of the joint venture to be appropriate. The Company may consider several factors involved such as the ability to achieve annual budgeting goals, the trend of sales quantity and profits before interests, income tax, depreciation, and amortization (EBITDA) as well as business plans and competitive atmosphere of the time and directions in the future and (2) the pricing for the stocks involved shall be on the fair value basis assessed by independent financial advisor by the list of authorized persons by the Securities and Exchange Commission of Thailand.
These involvements were regular business transactions under general trading terms and conditions that entrepreneurs in the same manners offered to regular people (Arm’s length basis). Furthermore, the Company and its subsidiaries did not need to bare the risk from performance of the joint venture under the project.
The Company and SHOWA DENKO made a joint venture agreement according to the approval of the Company’s board meeting on 29 March 2017 to establish Asia Pacific Can company (“APC”) aiming to conduct business involving manufacturing of aluminum cans used as packaging on APG’s site at Bang Pakong, Chachoengsao province with an installed capacities of around 1 billion cans per annum with the shareholding percentage of 74% and 26% respectively in July 2017. Later in December 2017, the company’s name was renamed to Asia Can Manufacturing Company Limited (“ACM”), expecting to initiate all commercial production in 3rd quarter of 2018.
In April 2017, the companies’ group signed an amendment contract about rights and sponsorship fee for Chelsea Football Club and received special conditions for extending the period of being a partner from 3 years ending on 30 June 2019 to 5 years ending on 30 June 2021. The Company’s group will pay an additional sponsorship fees for the amount of GBP 3.0 million for the whole extending duration of the amendment contract. However, the rights to advertising and promoting trademarks involved will be downgraded from Principal Partner when the first 3 years come to an end to Global Partner in the 4th and 5th year respectively.
CBD invested in 2 new production lines according to the approval of the Company’s board meeting on 18 July 2017, which will raise the installed capacities of canning factory to approximately 1.4 billion cans per annum by expecting to initiate commercial production in 1st quarter of 2018.
On 14 November 2017, the Company’s board meeting approved to the Change of overseas subsidiaries’ capital structure transaction detailed as follows: (1) CHHK increased registered capital by GBP 19.5 million or around USD 26.5 million to exercise the right offering share subscription, to which CVHLUX issues for sales proportionately, both for the Group’s amount and the amount that were the rights of ICSG because ICSG as one of the shareholders of CVHLUX waived the rights to buy the right offering shares in CVHLUX at the full amount proportionately to shareholdings and (2) CVHLUX increased registered capital by the amount of GBP 40.3 million or around EUR 45.4 million by issuing ordinary shares at the ratio of 1:1 for the value of increased capital divided into two groups consisted of (2.1) Issuing ordinary shares for shareholders in proportion of the shareholdings by calling for payments in cash for GBP 9.5 million or around EUR 22.0 million and (2.2) Issuing ordinary shares to support CVHLUX conversion of shareholders’ loans that were owed to CHHK and ICSG stockholders to fund to business operation of ICUK in 2017 by using capital from the newly issued shares to payback the loans from both sides of shareholders for GBP 20.8 million or around EUR 23.4 million (Payment in kind) resulting in the Company and ICSG have the changed proportion of shareholdings in ICUK indirectly through CVHLUX from 51.0% and 49.0% to 84.3% and 15.7% effectively in January 2018. After that, Northend Investment Limited (“NIHK”) acquired and received shares held by ICSG in CVHLUX in total of 6 million shares resulting in NIHK and ICSG have the proportion of shareholdings at 9.6% and 6.1% of the post-transaction registered and paid capital respectively.
The Company received a credit rating by TRIS Rating Company Limited at “A-” and had a “stable” outlook in November 2017.
The project to expand amber glass bottles manufacturing power by APG was successful and started commercial production in December 2017 causing the manufacturing capability of the amber glass bottles used as the packaging for the energy drink products under the brand Carabao Dang to double to 1.3 billion bottles per annum from 650 million bottles per annum.
The distribution centers were fully established at 31 locations with a cash-van fleet of 333 vans at the end of 2017.
CBD initiated the project for a new canning factory and invested in installing 2 new production lines in Bang Pakong, Chachoengsao province according to the approval of the Company’s board meeting on 11 August 2016 which when finished will increase installed capacities for canning factory from 350 million cans per annum to 800 million cans per annum under the first phase which had initiated commercial manufacturing in the 2nd quarter of 2017.
APG started to develop the project to expand amber glass bottles manufacturing capacity according to the approval of the Company’s board meeting on 11 August 2016 which when finished will increase manufacturing installed capacities to 620 tons of glass per day or the equivalent of 1.3 billion “Carabao Dang” brand’s amber glass bottles per annum and will start all commercial production in the 4th quarter of 2017.
The Company and Intercarabao Private Limited (“ICSG”) made a joint venture according to the approval of the Company’s board meeting on 11 August 2016 to hold stocks in ICUK aiming to conduct business in marketing and distribution of energy drink under the brand Carabao for the market in England and other countries outside of Asia. The shareholding percentage direct and indirect holdings are at 51.0% and 49% respectively. The Company invested by holding the stocks indirectly through newly established companies namely CHHK and CVHLUX.
CVHLUX signed as a supporter of the English Football League (EFL) cup in England for 3 seasons starting from 2017, which was a marketing strategy aimed to continue the success of connecting the product in both quality and image with a leading international football competition and team.
30 distribution centers established with a fleet of 337 cash vans in total at the end of 2016.
On May 12, CBG was selected to the MSCI Global Small Cap Indexes (effective May 29, 2015).
On July 7, CBG received the “Most Improved Investor Relations” from Alpha South East Asia in the event of the 9th Annual Best Financial Institution Awards & the 5th Annual Corporate Awards 2015.
CBG was added to the SET50 Index of The Stock Exchange of (effective July 1 until December 31, 2015).
In November, CBG signed an agreement to become 1 out of 3 Principal Partners of Chelsea FC, the world’s premiere league football club, on par with the other 2 Principal Partners, Adidas active wear and Yokohama manufacturer of automobile tyre. The agreement for 3 consecutive seasons, beginning year 2016, will bring the Group’s logo to worldwide brand recognition, which is in-line with the Group’s business strategy to increase its export revenue.
CBG established regional distribution centers for the operation of cash van. At the year-end 2015, the Group has opened and operated 9 distribution centers.
CBD installed a Krones production line with a maximum production capacity of 350 million bottles per year, resulting in an increase of maximum production capacity from 850 million bottles per year to 1,200 million bottles per year.
CBD readjusted two existing bottle packaging conveyors that have a maximum production capacity of 120 million bottles per year to be used for the packaging of electrolyte drinks. This resulted in CBD has the remaining production capacity of bottled energy drinks was 1,080 million bottles per year and the maximum production capacity for electrolyte drinks was 120 million bottles per year.
In May, CBD launched its electrolyte drinks under the "Start Plus" trademark in Thailand.
Prior to the initial public offering, the board of directors meeting No. 6/2014 held on 30 June 2014 resolved to approve the payment of interim dividend to existing shareholders of the Company in the amount of Baht 279.0 million. The effects of such dividend payment on the Company's financial position are disclosed in Section 2.4 Chapter 16: Management Discussion and Analysis.
The Company increased its registered capital by Baht 230.0 million by issuing 2.3 million ordinary shares, each at a par value of Baht 100.0. Thus, registered capital of the Company was increased from Baht 620.0 million to Baht 850.0 million. The objectives of the capital increase were to (1) the Group's restructuring by acquiring additional 30 percent of shares in CBD thus resulting in the Company holding 100 percent of shares in CBD (Details of the restructure are in Section 2.3 Chapter 14: Related Party Transactions; and (2) to pay up the capital of APG in an amount of Baht 140.0 million for the construction of the amber glass bottle manufacturing factory.
Carabao Group Co., Ltd. was converted to a public limited company and changed its name to "Carabao Group Public Company Limited". The par value of the shares has been changed from Baht 100.0 per share to Baht 1.0 per share. The Company also decided to issue no more than 150.0 million new ordinary shares for public offering (Details on capital restructuring are in Section 2, Chapter 9: Information on Securities and Shareholders)
In August, APG's amber glass bottle factory commenced its commercial operation.
CBD installed two additional bottle packaging conveyors, totaling a maximum production capacity of 120 million bottles per year, thus resulting in an increase of maximum capacity from previously 730 million bottles per year to 850 million bottles per year. The increase was to support the growth of its business of manufacturing, marketing and selling energy drinks.
CBD installed one can packaging conveyor, resulting in an increase of maximum production capacity by 145 million cans per year, or an increase from 205 million cans per year to 350 million cans per year.
The shareholders recognize the importance of procuring amber glass bottles. As a result, APG, which was a company established by the existing shareholders on 23 September 2005, was used to operate the business of manufacturing, and procuring glass bottles. APG's registered capital was increased from the initial registered capital of Baht 100.0 million, divided into 1.0 million ordinary shares with the par value of Baht 100.0 each to Baht 450.0 million, divided into 4.5 million ordinary shares with the par value of Baht 100.0 each. The registered capital of Baht 450 million was fully paid up in 2014. APG is the owner of a title over a land in Bang Samak Phimpa Sub-District, Bang Pakong District, Chacheungsao Province. APG will use such land in the construction of its amber glass bottle manufacturing factory.
APG obtained a Promotion Certificate No. 2326 (4)/2556 from the BOI, under which APG is entitled to tax benefits and other benefits for the manufacture of glass bottles as specified in such Promotion Certificate.
CBD increased its registered capital by Baht 100.0 million by issuing 1.0 million new ordinary shares, each with a par value of Baht 100.0, resulting in an increase in the registered capital from Baht 200.0 million to Baht 300.0 million.
In order to prepare to be listed on SET, the shareholders, Mr. Sathien Setthasit, Miss Nutchamai Thanombooncharoen and Mr. Yuenyong Opakul, incorporated Carabao Group Co., Ltd. (the "Company" or "CBG") as a holding company on 28 August 2013 with the initial registered capital of Baht 1.0 million, divided into 10,000.0 ordinary shares with the par value of Baht 100.0 each. Subsequently, the Company carried out the restructure of the Group by continuously increased its registered capital for acquiring shares in all three subsidiaries, namely CBD, DCM, and APG from the existing shareholders of each subsidiary at that time at the par value for 70%, 100% and 100% respectively (Details of the Group restructuring are in Section 2.3 Chapter 14: Related Party Transactions). As a result, as of 31 December 2013, the Company's registered capital was Baht 620.0 million, divided into 6.2 million ordinary shares, each with a par value of Baht 100.0.
DCM was incorporated with the initial registered capital of Baht one million, divided into 10,000.0 ordinary shares, with the par value of Baht 100.0 per share. Subsequently, the registered capital was increased by Baht 99.0 million, divided into 990,000.0 shares, with the par value of Baht 100.0 per share, resulting in an increase of registered capital of DCM from Baht 1.0 million to Baht 100.0 million in order to operate the core business of managing domestic distribution of drinks.
CBD officially appointed DCM as the distribution manager for all of CBD's products in place of third party distributors.
CBD added two bottle packaging conveyors, totaling a maximum production capacity of 182 million bottles per year, or an increase in the maximum production capacity from 548 million bottles per year to 730 million bottles per year.
CBD added another can packaging conveyor, resulting in an additional maximum production capacity of 88 million cans per year, or an increase from the maximum production capacity of 117 million cans per year to 205 million cans per year.
CBD installed a can packaging conveyor with a maximum production capacity of 117 million cans per year.
CBD started export of energy drinks.
CBD increased its registered capital by Baht 70.0 million by issuing 700,000.0 ordinary shares with the par value of Baht 100.0 each, causing the registered capital to increase from Baht 130.0 million to Baht 200.0 million in order to expand its production capacity by installing an additional three production lines, totaling a maximum production capacity of 273 million bottles per year. As a result, CBD has increased its maximum capacity from originally 275 million bottles per year to 548 million bottles per year.
The Group won the Media & Marketing Magazine Asian Brand Marketing Effective Awards and Popular Vote from Marketing Association of Thailand for the television advertisement campaign used in the launch of Carabao Dang in 2002.
CBD increased its registered capital by Baht 99.0 million by issuing 990,000.0 ordinary shares with the par value of Baht 100.0 each, resulting in an increase of registered capital from Baht 1.0 million to Baht 100.0 million. There was another increase of capital by Baht 30.0 million, divided into 300,000.0 ordinary shares, each at a par value of Baht 100.0. The registered capital was thus increased from Baht 100.0 million to Baht 130.0 million. The objective of the capital increase was to purchase machines required in the manufacturing of energy drinks and to be used as working capital.
The Carabao Dang manufacturing factory is located in Bangpriang Sub-district, Bangbo District, Samut Prakan Province. The factory commenced its commercial operations having three production lines, with a maximum production capacity of 275 million bottles per year.
In October, CBD launched an energy drink under the "Carabao Dang" trademark. At that time, CBD appointed a local distributor to be the exclusive domestic distributor of Carabao Dang.
CBD was incorporated with the initial registered capital of Baht 1.0 million, consisting of 10,000.0 ordinary shares with the par value of Baht 100.0 each. The company was a joint investment among Mr. Sathien Setthasit, Miss Nutchamai Thanombooncharoen, and Mr. Yuenyong Opakul (Aed Carabao) to operate the business of manufacturing, marketing, and selling energy drinks.
CBD commenced the installation of machines in its energy drink manufacturing factory.