Message from the Board of Directors

Dear Shareholders,

Thai economy in 2016 grew at a slow pace and was affected by the risk from domestic and foreign factors; for example, the impact from the sluggishness and uncertainty of the world economy, the decreased price of agricultural products, the deceleration of household consumption and investment in private sectors, and the high level of household debt. However, the government tried to stimulate the economy and increase consumer confidence through various policies; for instance, the disbursement on infrastructure investment projects, tax incentives to encourage domestic investment in private sectors, cash handouts to low-income people, improving liquidity for SME, “Help Thailand Welcome New Year Together” project, and “Shopping for the nation” project the year-end shopping tax break implemented for 2 consecutive years.

Business Expansion

The Company opened 4 new HomePro stores located in Chaiyapruk, Bang Sare, Rama 9 and Srinakarin, and relocated a branch in Rama 3. The Company opened 4 new Mega Home stores in Rojana, Hat Yai, Nakhon Ratchasima and Nakhon Phanom, and opened an overseas HomePro branch in Summit USJ Mall in Subang Jaya, Malaysia. As of December 2016, the Company has 80 HomePro stores, 11 Mega Home stores and 2 overseas HomePro stores in Malaysia. The performance of HomePro and Mega Home were overall satisfactory. The performance of HomePro in Malaysia was better than the expected target. The Company continues to open new stores to achieve and increase the economy of scale in the future.

In addition, in 2016 the Company expanded into new market groups under the concept of fulfilling various demands of customers that are (1) Bike Club: a bike center providing a complete range of related services. (2) HomePro Living: a home furniture and decoration shopping center offering functional and modern design products suitable for all lifestyles.

For future target, the Company focuses on store expansion in Bangkok, major cities with economic significance in other provinces, and neighboring countries. The Company will also renovate existing stores to make them more modern and improve the shopping atmosphere, as well as explore new product lines and services to create value and answer customer demands effectively. In addition, the Company will focus on enhancing the development and management of stores along with striving to save energy by incorporating more environmentally friendly technology

Operating Performance

For the performance in the first half of 2016, sales revenue grew higher due to the same-store sale as well as business growth from new HomePro and Mega Home stores, especially for cooling merchandise group. For the second half of 2016, sales volume from existing stores grew at a slow pace as a result of economic pressures. The total sales volume continue to grow, a result of new HomePro stores, Mega Home, HomePro Malaysia, sales from “HomePro Fair” organized in July for the first time, and new business expansions including Bike Club and HomePro Living.

An overview of other aspects in 2016; sales expenses increased according to the business expansion, while administrative and other expenses decreased from the efficiency improvement of internal operations and activities to reduce losses (Lean Management) resulting in an increased net profit by 17.90% compared to last year. In addition to the business expansion, the Company continues to seek and improve products and services by offering more choices to customers. The Company offers additional benefits to customers with Home Card membership, which currently has over 3 million members.

Management for Sustainability

Home Service past experiences helps HomePro understand customers’ needs and problems of home maintenance and repairment. In 2016, HomePro introduced a new service innovation known as “Home Makeover”, providing home renovation services by a team of experts who supervises the project from start to finish, assists in budget control, and guarantees the quality according to the condition.

The Company operates upon good corporate governance practices, including fair operations, anti-corruption, and stakeholders’ responsibilities. Therefore, the Company was rated and rewarded various national and international awards, for instance:

  • Receiving a full score of 100 from the Thai Investors Association for the assessment on the quality of shareholders’ meeting for 8 consecutive years.
  • Rated a governance level of “Excellence: 5 stars” from the Thai Institute of Directors Association (IOD).
  • Being selected as 1 of 100 listed companies having outstanding progress in Environmental, Social, and Governance (ESG) performance from Thaipat Institute.
  • Being listed in “MSCI Global Sustainability Indexes” and “MSCI Global SRI Indexes” with “A” rating from Morgan Stanley Capital International.
  • Being listed in “FTSE4Good Emerging Index” and “FTSE4Good ASEAN 5 Index” the indexes evaluate ESG issues of listed companies in Thailand and ASEAN.
  • Receiving “Outstanding Investor Relations Awards” in the SET Awards 2016, the awards are given to companies with outstanding performance in conducting investor relations activities. The participation of all parties within the company is the key part for the consideration.
  • Being listed in “Thailand Sustainability Investment (THSI)” for 2 consecutive years, and receiving SET Sustainability Awards 2016 for “Rising Star”.

Throughout 2016, the Company operated the business with great effort under the pressure of the economy and society from every direction. The Board of Directors would like to thank all shareholders, customers and partner businesses for always trusting and supporting the Company. The Board of Directors would also like to thank over 10,800 fellow employees of the Company and subsidiaries for their dedication and good teamwork to help the Company reach the goal. The Company affirms the intention to operate under good corporate governance by taking into account the benefits of all stakeholders in order to drive the growth of every party together, steadily and sustainably.

 

(Mr. Anant Asavabhokhin)

Chairman

(Mr. Khunawut Thumpomkul)

Managing Director