Message from the Board of Directors SCG Packaging Public Company Limited

The economies of Southeast Asia continue to grow at a strong and healthy pace, relative to other regions, while the global economy has recently encountered dramatic challenges such as the US-China trade war, oil prices fluctuations, and volatility of the capital markets and currency rates.

The packaging industry in Southeast Asia witnessed healthy growth in 2019, driven by competitive product and service exports, favorable demographics with increased purchasing power of the working class, and other lifestyle changes. All of these factors have led to the growth of packaging offering for the variety of consuming behaviors, namely convenient packaging, environmentally friendly packaging, and transportation packaging especially for E-Commerce industry. Moreover, industrial factors, such as the growth of the electronics and electric appliance sector in Vietnam, the vibrant food, beverage and consumer goods industries, as well as the growing footwear and textile industries in Indonesia, have all played important roles. Another factor behind these growths has been the relocation of Chinese manufacturing base to Southeast Asia.

Domestic packaging demand within Thailand in 2019 slightly increased, attributed to the resilient growth of consumer products, the emerging E-Commerce business, as well as the increasing need for environmentally friendly packaging, while the export sector slowed due to the prolonged US-China trade war, and the appreciation of the Thai Baht.

The company continues to focus on expanding its investments in the Southeast Asia region, and works towards improving the organization’s efficiency to respond to quick pace of changes through more competitive supply chain offerings such as integrated packaging solutions. With the company’s efforts, total revenue from sales in 2019 registered at 89,070 million baht, representing a 2% increase from last year, in which sales from Southeast Asia (excluded Thailand) was accounted for 30% of the total revenue. Earnings was 5,269 million baht, a 13% decrease from last year, attributed to lower selling price of the fibrous chain and the adjustment of employee benefits as a result of the amendment to the Thai Labor Law of 338 million baht.

Maintained Market-Leading Position by Continuously Expanding Investment in the Region

The company expanded its investment through the acquisition of the 55% stakes in PT. Fajar Surya Wisesa Tbk. (“Fajar”), a leading paper packaging business in Indonesia, with the investment valued at 20,817 million baht and the acquisition Annual Report 2019 6 SCG Packaging Public Company Limited of the 80% stakes in Visy Packaging (Thailand) Company Limited (“Visy (Thailand)”), the high technology thermoformed food packaging company supplying to world class food companies, with the investment valued at 4,305 million baht.

Accelerating Growth with the Initial Public Offering (IPO)

The company has submitted its filings to the Securities and Exchange Commission to issue and offer new shares through the Initial Public Offering (IPO) at the amount of not exceeding 30% of the company’s total paid up capital after its capital increase. The net proceeds from the IPO will be used for business expansion for continued growth within the region, for financial restructuring that will allow future business expansion, as well as for providing better agility in business management.

Innovative Products and Services as Integrated Packaging Solutions

The company continues to focus on developing new products, services and technologies that delivers a variety of packaging solutions to enhance our customers’ brand perception. This is in addition to the efficient supply chain offerings that fulfill the consumer’s behaviors in an environmentally friendly manner. An example of this is OptiBreathTM, a packaging solution that prolongs shelf-life of fresh fruits and vegetable through the use of film technology that controls the flow of air and vapor which is suited to different type of fruits and vegetables. Another example is Fest, an environmentally friendly food safety packaging made from eucalyptus pulp, which can be heated in a microwave and is biodegradable within 60 days. These examples show the company’s commitment to offer quality packaging solutions that meet our customers’ differentiated needs.

Human Resources, Society, and Environment

The company continues to place its tremendous focus on developing its personnel’s skills to competitively deliver the integrated packaging solutions and fostering strong organizational culture, as well as improving the work processes for maximum efficacy through the use of Artificial Intelligence (AI) and automation technologies. There is also the emphasis on the increasing use of environmentally friendly energy through the conversion of waste from the manufacturing process into electricity for internal use, as is the case with the “Ban Rang Plub Community Model”, which the company has been providing supports for the past 5 years and has been awarded the first prize at the national Zero Waste Community Project Contest 2019, organized by the Department of Environmental Quality Promotion. Knowledge from this project will be transferred to other communities to promote further cooperation and the eventual growth of trash management networks at district levels.

The Board of Directors would like to express our gratitude to all shareholders and other relevant parties for the continued trust and support you have placed with the company. We would like to assure that the company will continue to develop its organization effectiveness and drive towards success with strong adherence to good governance, furthering the company’s prosperity, maintaining its leading position in the Southeast Asia region, as well as to embed the Circular Economy principle into the work processes throughout the supply chain as the key foundation to build sustainable business growth for the company.

Bangkok, January 28, 2020

(Mr. Prasan Trairatworrakul)

Chairman

(Mr. Wichan Jitpukdee)

Chief Executive Officer