To All Shareholders

TPI Polene Paving the Way towards Sustainable Business Development,

with Green Technology, Products, and Innovations

Aiming to Mitigating the Negative Impact of Climate Change

 

The severity and fluctuations of the climate, resulting in a continually increasing impact on people's well-being over the years, have prompted the TPI Polene Group to prioritize addressing climate change, which necessitates urgent action. Furthermore, the Company has conducted its business with a focus on sustainable development in the Environmental, Social, and Governance (ESG) areas. Consequently, its cement plants have obtained certification and permission to utilize the logo “Green Industry” from the Industrial Environment Technology Promotion Division, Department of Industrial Works, Ministry of Industry, as part of their journey towards becoming a "Green Industry." This commitment entails enhancing production processes, managing energy efficiently, and maintaining environmental quality continuously, thereby operating as an environmentally responsible business with social accountability across the organization's supply chain. This accreditation enables TPI Polene to receive benefits in product procurement from government agencies and local administrative organizations equivalent to those for environmentally friendly products.

 

By 2023, TPI Polene Group plans to substitute waste fuel for coal across all four production lines of its cement plants, targeting a 25% displacement of the required heat. By 2025, the aim is to completely 100% replace coal with waste fuel in power plants, creating clear concreteness of business operations, reducing business risk amidst coal price fluctuations, compared to the relatively constant waste costs. This aim also include the reduction of risks from the climate change issue garnering international attention, leading to the goal of reducing greenhouse gases and adhering to guidelines for reducing greenhouse gas emissions in the future. This will result in the reduction of the Company's business operating costs and greenhouse gas emission risk.

 

Additionally, TPI Polene is dedicated to conducting business by prioritizing the care and responsibility towards stakeholders both within and outside the organization. This commitment entails promoting and supporting suppliers to operate with good governance, while ensuring compliance with relevant laws and regulations as outlined in the organization's Code of Conduct and ESG policy. Through such dedication, TPI Polene seeks to generate positive returns for shareholders, investors, customers, and suppliers, while also promoting for human rights, employee well-being, and enhancing the overall quality of life within the TPI Polene Group. Moreover, TPI Polene places a high priority on preserving the natural environment, thereby fostering societal happiness and promoting sustainable coexistence.

 

Consistently rising 2023 operating performance

In 2023, the Company and its subsidiaries registered earnings before interest, taxes, depreciation and amortization (EBITDA) of Baht 10,055 million. As of December 31, 2023, the Company and its subsidiaries’ net IBD/ EBITDA ratio equated 6.41 times. It is classified as a company with debt repayment potential.

In 2023, the Company and its subsidiary registered normal operating profit for the year of  Baht 4,509 million. In 2023, the Company and its subsidiaries registered profit for the year of Baht 4,305 million, which was comprised of normal operating profit of Baht 4,509 million, net foreign exchange gain of Baht 88 million and tax expense of Baht 292 million.  

The Offering for Sale of Baht 21,935.20 million Debentures in 2023

In 2023, TPI Polene Group successfully completed fundraising through the issuance and sale offering of debentures in a total amount of Baht 21,935.20 million with TRIS Rating Company Limited TRIS affirmed credit rating of such debentures at the level of “A-” (Single A Minus), with a “Stable” Outlook. The proceeds from the fundraising were utilized mainly to refinance mature debentures. The remaining funds were allocated towards investing in machinery to enhance production efficiency across its cement plants, LDPE/EVA plants, power plant, and modern phamarceuticals plant, as well as for working capital to support business operations.

TPI Polene Group continues to achieve satisfactory operating results and consistently implements cost reduction measures alongside various projects aimed at increasing profits. These efforts are directed towards maintaining its capability to meet high-level interest payments and principal repayments.

Climate Change Management

The Board of Directors and senior executives, after assessing risks, supportive measures, and considering the implications of climate change, have set a carbon neutrality goal to be achieved by 2043, surpassing Thailand's aim to achieve carbon neutrality by 2050.

TPIPL assessed risks associated with climate change and established both short-term and long-term goals and strategies for reducing greenhouse gases, which pose risks to its business operations. The Company has allocated funds to adapt its technology to be more environmentally friendly, such as utilizing waste as fuel instead of coal in the cement production process, reducing its dependence on fossil fuels, and transitioning to electricity from renewable sources. Moreover, it has introduced electric vehicles and heavy machinery, such as EV Dump Trucks, in place of engines powered by fossil fuels or diesel. The return on this investment is significant, enabling the Company to advance its low-carbon strategy effectively in response to climate change risks and ultimately achieve its goal of reducing greenhouse gas emissions.

            In 2023, the four production lines of the cement plants were able to utilize waste fuel in stead of coal representing 14% of the required heat. This figure falls short of the target set at 25%, as the cement plants have been progressively installing machinery to enable the use of waste fuel instead of coal across the four production lines. The final production line completed the installation of machinery only in December 2023. Consequently, the average rate of using waste fuel instead of coal in 2023 has not yet reached the 25% target.

As for the electricity generation process of TPI Polene Power Public Company Limited (a subsidiary), the Company has successfully used all renewable waste fuels in the B6 steam generator and is in the process of constructing additional steam generators to use waste fuel in place of coal. The TG8 power plant is expected to operate completely with the use of waste fuel in 2025, allowing the Company to entirely terminate the use of coal by that year. Additionally, there is a solar power plant and wind power (Renewable Energy) expected to commence operations in 2024. This will result in obtaining a renewable energy production certificate (REC100), ultimately making the TPI Polene Group entirely coal-free in terms of power generation.

 

In 2023, the TPI Polene Group converted waste into fuel, replacing coal in both electricity and cement production processes, amounting to approximately 2.77 million tons. This initiative led to a reduction in greenhouse gas emissions by approximately 6.43 million tons of carbon dioxide equivalent. (Calculations based on the emission factor for the above waste release indicate 2.32 tons of greenhouse gas emissions per 1 ton of waste released into a landfill.)

 

Reduction of Transportation and Maintenance Costs Along with Solving Environmental Issues

TPI Polene Group has persistently decreased transportation and maintenance expenses while also tackling Climate Change Mitigation and environmental impacts across its value chain, encompassing employees, partners, customers, and social communities. This is accomplished through the adoption of electric vehicles in lieu of combustion engine vehicles that rely on oil as fuel for transporting construction stones within the Company's factories. Furthermore, the utilization of a conveyor system to transport stones from the quarry to the factory serves to further diminish dependence on combustion vehicles utilizing oil as fuel. In addition, TPI Polene Group has replaced combustion system transport vehicles with electric vehicles that are environmentally friendly. This initiative has led to reductions in transportation costs, fuel expenses, and maintenance costs, while also decreasing greenhouse gas emissions, which contribute to global warming. Furthermore, this transition aims to mitigate the impact of PM2.5 dust on air quality, thereby fostering a healthier environment.

Focus on Green Products

In 2023, TPI Polene recognized the importance of driving solutions to climate change and transitioning to a low-carbon economy and society. They achieved this by producing products that reduce greenhouse gas emissions, substituting other raw materials for limestone, utilizing waste fuel instead of coal, and sourcing electricity from renewable energy sources. These efforts resulted in the creation of Green Products that support Green Construction, including Green Clinker, Hydraulic Cement or Green Cement, Green Fiber Cement, and Green Concrete Roof Tile, among others. These products play a crucial role in reducing greenhouse gas emissions, thereby mitigating global warming.

Leader in Specialty Polymer Business

               The Company continues to focus on the technology market, aiming to become the leader in the specialty polymer business, which is environmentally friendly and offers added value and higher profit margins than the general market. The Company is improving its production technology to be more flexible, a capability that other large manufacturers cannot match. Therefore, the Company must conduct research and develop knowledge internally. As the sole manufacturer in Southeast Asia, the Company has developed and produced product samples for testing and trialing new markets before integrating new technology into actual production lines in the future. The Company successfully produced new hotmelt-grade EVA specialty products by 2023. Consequently, the Company can focus on producing high-value grades for photovoltaic and hotmelt applications instead of shoe and coating grades. As a result, the proportion of its products consists mostly of high-value-added products.

Development of Technology and Innovation to Reduce Risks and Create Opportunities for Sustainable Growth

TPI Polene Group continues to seek investment opportunities in businesses with high-profit margins and growth, while also managing production costs and reducing administrative expenses to increase its potential in conducting business. Additionally, the Company continues to focus on developing technology and utilizing innovation to drive its businesses, aiming to reduce risks and create opportunities for sustainable growth. Nowadays, every business must invest in new technology to increase efficiency and competitive potential. Failure to consider new investments may result in lost business opportunities, potentially leading to an inability to generate sustainable income or even causing the Company to eventually cease operations if it cannot keep up with disruptive industry trends. TPI Polene Group has integrated sustainability risk (ESG Risk), including environmental, social, and governance risks, into its mission and strategy, aiming to build confidence among stakeholders in a balanced manner.

Value Creation for Better World

TPI Polene Group has also emphasized value creation for a better world through the production and sales of plant-related products derived from organics, such as organic biofertilizers and soil conditioners. These products are environmentally friendly, preventing soil spoilage. Additionally, they offer new innovative solutions like wood vinegar, which can repel insects from plants, vegetables, and fruits without the use of dangerous insecticides that pose risks to farmers and consumers. Moreover, these products are priced cheaper than chemical fertilizers, increase yields per Rai and reduce harm caused by the use of pesticides, reducing production costs and increasing safety for better quality of life of farmers. This initiative also supports government policies promoting organic agriculture. In addition, TPI Polene Group has also sold products related to livestock and fisheries, such as synbiotics. Synbiotics aid in building immunity and digesting food scraps that cause putrid smells, which can turn into methane gas and serve as a breeding ground for harmful germs. When animals are fed with synbiotics, they receive good nutrition, promoting good health, have immunity against diseases, without the use of antibiotics and eliminating bad smells in animal shelters. This allows farmers to reduce animal feed costs and mitigate greenhouse gas emissions, thus contributing to global warming prevention. It is a project that provides food safety and food security for humans.

 

TPI Polene Group has also invested in projects to produce and sell healthcare products and modern medicines for humans and has received investment promotion from the Board of Investment. The Company expects to register these modern medicines with the Food and Drug Administration and apply for a license to certify Good Manufacturing Practice (GMP) standards. This project aims to manufacture healthcare products and a range of generic medicines for everyday ailments such as stomach pain relief, sore throat remedies, mouthwash, and muscle relaxants, thereby reducing the need for costly medicine importation. The TPI Polene Group employs a team of pharmacists dedicated to researching and developing these products, utilizing raw materials consisting of active ingredients listed in contemporary pharmacopoeias. Through the implementation of modern, hygienic, and clean production methods, the Company ensures the production of healthcare products and safe medicines for consumers.

In 2023, TPI Healthcare Co., Ltd. invested in adding a production line for its beverage product named “Provita,” a probiotic drink mixed with vitamins designed to aid in digestion and boost the body's immunity.and neutralize microbes that can cause diarrhea.   In addition, the company also manufactures and sells Bio Knox products, which can kill Viruses such as Covid and others upon touching or consuming, causing the Virus-Covid to be eliminated within 5 minutes.

 

Sustainable Development Performance

With the success of the Company adopting sustainable values to continuously drive business operations, resulting in the year 2023, TPI Polene Group received awards and certifications from recognized organizations in promoting sustainable development, in tems of Environment Social and Governance (ESG). Details are summarized as follows:-

1. In 2023, the Company was recognized among the ESG100 securities companies for its exceptional performance in environmental, social, and governance (ESG) criteria within the Real Estate and Construction category. This marks the second consecutive year (2022-2023) that the Company has received this accolade, solidifying its position as a company with promising investment opportunities within the real estate and construction sector. The award is administered by the Thaipat Institute.
2. The Company was rated as "SET ESG Ratings : AA " for the year 2023 by the Stock Exchange of Thailand.
3. The Company received the Corporate Governance Report of Thai Listed Companies (CGR) for the year 2023 from the Thai Institute of Directors Association (IOD) with a 5-star rating, indicating Excellent CG Scoring.
4. The Company received the 3G Excellence Award in CSR Activities for 2023 from the Global Good Governance Awards (3G Awards) 2023 Event, organized by the financial consulting company 'Cambridge IFA International Financial Advisory, United Kingdom'.
5. The Company received two honorary awards from the "One Million Good Deeds with Brave in Repayment to the Land" ("Neung Lan Kla Kwam Dee Torb Than Pan Din") Project for the year 2023. These awards include the Award for Good Deeds Returning to the Land in the Agricultural Innovation Field and the Excellence Award in Technology Management, Innovation, Research, and Development Field.
6. The Company received the SET Awards 2023 for the Outstanding Innovative Company Award among listed companies for its innovation in " Diffuser-Profile Vortex Generator," organized by the Stock Exchange of Thailand and Money & Banking Magazine.

On behalf of the Board of Directors of TPI Polene Public Company Limited and its affiliates, we extend our heartfelt appreciation to shareholders, debenture holders, financial institutions, employees, and all stakeholders for their unwavering support and trust in the TPI Polene Group. Your support has been instrumental in our continuous success in business operations. This collective support and trust serve as a driving force for our executives and employees to collaborate towards achieving sustainable business growth and mitigating environmental pollution. Through our efforts, we have successfully reduced greenhouse gas emissions and minimized the impacts of climate change, contributing to the resolution of global warming issues and fostering a sustainable environment. These initiatives not only strengthen our organization but also benefit the economy, society, and the nation as a whole, while ensuring the well-being of all stakeholders in a balanced manner guided by the principles of good governance.

                                                     

Sincerely Yours,

 

Mr. Khantchai Vichakkana Chairman of the Board and Independent Director	Mr. Prachai Leopairatana Chief Executive Officer