Mr. Rit Thirakomen

Chairman and Chief Executive Officer

Dear Shareholders,

The year 2021 was the second consecutive year that the restaurant business, irrespective of the size of restaurants, was severely affected by the prolonged Covid-19 infections which occurred in multiple waves with different variants. The first and the second waves occurred in 2020 with the Wuhan virus as the dominant strain while the third and the fourth waves occurred in late march and July-August of 2021 respectively with the Delta virus as the dominant variant. As the Delta variant is capable of transmitting the virus more quickly and easily and its symptoms are more severe, the number of new infections surged rapidly and reached its historical peak during the third quarter of 2021. This development prompted the government to reimpose stricter Covid-19 control measures from time to time in accordance with the severity of the infections. The key infection control measures which severely impacted the operations of restaurants included the prohibition of dine-in services while allowing only the offerings of take-away and delivery services during the second quarter, and the enforcement of stricter measures by outright closing of shopping centers and restaurants during the third quarter of 2021. However, as the number of new infections gradually declined and the vaccination rate increased steadily during the fourth quarter, the government started to ease the strict infection control measures and decided to reopen the country for tourism again at the end of 2021.

The quarterly operating results of the Company for the year 2021 were also adversely affected in different degrees in accordance with the severity of the infections and the intensity of the Covid-19 containment measures imposed by the government from time to time. This was reflected by the fact that although the Company managed to log a net profit of Baht 88.8 million in the first quarter, the Company suffered two consecutive quarterly losses of Baht 99.5 million and Baht 257.4 million in the second quarter and the third quarter respectively as result of the closure of restaurants mentioned earlier. However, the operating result of the Company recovered strongly to register a net profit of Baht 399.1 million in the fourth quarter largely as result of the government’s easing of the strict Covid-19 control measures as mentioned previously. In summary, the operating result of the Company for the whole fiscal year 2021 was unfavorably affected more severely than the previous year as indicated by the fact that revenue from sales and services for the year 2021 recorded a drop of 16.3 percent from the previous year to Baht 11,182 million. Net income for the year 2021 also fell significantly by 85.6 percent year on year to Baht 131 million while earnings per share dropped from Baht 0.99 per share for 2020 to Baht 0.14 per share for 2021.

In 2021, the Company continued to streamline its work process in order to improve operating efficiency as well as to address the coronavirus-related safety concerns by making use of digital technology. For example, the use of more secured work-from-home setup, the use of more efficient online meeting setup to allow the participation in the meeting wherever you are, the use of QR code for ordering food at the dining table in place of menu book, and the use of automated cash recycling machines to ease the work of cashiers. The Company also installed solar roof on the roofs of all factories and the head office building to reduce costs. The latest development on the work process streamlining is the plan to install over 500 delivery robots at the restaurant outlets to ease the burden of servers. A total of over 250 restaurants have already been equipped with robots and will continue to equip all the remaining restaurants with robots if it is economically worthwhile to do so. All of these efforts will help the Company to reduce costs including rents, electricity expenses and wages. It will also help to save a lot of travelling time of the management staff. Meanwhile, the Company continued to review and assess the efficiency and the effectiveness of restaurants in the MK group in the light of the best interest of the Company in the long term. As a result, the Company decided to close 37 losing restaurants consisting of 14 MK Sukiyaki restaurants, 8 Yayoi Japanese restaurants, 1 Laem Charoen Seafood restaurant, 6 Miyazaki restaurants, 3 Bizzy Box restaurants, 4 Hakata restaurants, and 1 MK Harvest restaurant. To sustain its future growth, the Company continued to open 18 restaurants with growth potential in the future consisting of 8 MK Sukiyaki restaurants, 7 Yayoi Japanese restaurants, and 3 Laem Charoen Seafood restaurants.

Despite the operating results of the Company for the year 2021 were severely affected by the Covid-19 pandemic, the Company remains committed to its policy of providing social assistances as and when they are needed. This was evidenced by the fact that the Company together with Aunty Thongkam Foundation and the Company’s founders participated in the social assistance activities in 2021 as follows:

  • • Distributed over 500,000 meal boxes to the medical staff of 33 hospitals and vaccination centers.
  • • Delivered over 26 tons of fresh food materials to the community kitchens for cooking over 294,000 meals.
  • • Donated refrigerators for storing vaccines to 112 district and community hospitals nationwide to support the easy access to vaccines.
  • • Donated the total net profits of the four restaurants operated in the form of social business models to Siriraj Piyamaharajkarun Hospital.

It is believed that the awareness of the Company’s involvement in these public minded activities by the customers and the public would strengthen their confidence in the Company’s operations since they have realized that making profit is not the sole objective of the Company, the Company also desires to make meaningful contributions to the society both directly and indirectly. The direct social contributions include providing quality food in terms of nutrition, cleanliness, safety, and excellent services, while the indirect contributions involve consistently providing social assistances to the society in various ways.

In respect of the recommendation for the payment of dividends for the year 2021, it is deemed that despite net profit of the Company for the year 2021 decreased significantly from the previous year as a result of the prolonged Covid-19 infections and the strict containment measures imposed by the government as mentioned earlier, the liquidity and retained earnings of the Company remain strong and sufficient to support the payment of dividends at an appropriate rate for the year 2021 without adversely affecting the planned investment and operational needs of the Company in 2022. The Board of Directors has thus resolved to recommend the payment of a dividend of Baht 0.80 per share for the year 2021. Subject to the approval of shareholders at the 2022 Annual General Meeting, the payment of dividends of Baht 0.80 per share shall be made to shareholders who are eligible to receive dividends on May 25, 2022.

Looking ahead, it is expected that the Company will continue to face tough challenges in 2022 as a result of the ongoing Covid-19 pandemic and the outbreak of the highly contagious Omicron variant at the beginning of 2022. It is predicted that the Omicron variant will soon replace the Delta variant as the dominant strain since it is more contagious though less virulent than the Delta variant. Despite the Covid-19 uncertainty, the National Economic and Social Development Council forecast the Thai economy would grow by 3.5-4.5 percent in 2022 driven largely by the increased relaxation of Covid-19 restrictions, the Government’s successful containment of the Omicron variant, and the attainment of the targeted vaccination coverage. In view of these expected favorable developments, I am confident that the Company will be able to make a strong recovery on its operating performance in 2022.

Lastly, on behalf of the Board of Directors, I would like to thank our shareholders, joint venture partners, suppliers, customers and all other relevant parties for their continued support. I would also like to express my appreciation to our employees for their dedication and effort in overcoming the formidable challenges amid the worsening Covid-19 situation.