ANNUAL REPORT 20130B
is the leading home improvement retailer in Thailand. We operate 64 stores nationwide, providing product range cover 60,000 items with complete services as One Stop Shopping to attain highest customer satisfaction.
HomePro
Contents
2 Message from Chairman
3 Message from Managing Director
12 Financial Information
13 General Information
17 Board of Directors Profile
25 Nature of Business
30 Risk Factors
34 Shareholding Structure
35 Organization Chat
36 Management
52 Corporate Governance
59 Corporate Social Responsibility Report
81 Internal Control
83 Dividend Policy
84 Related Transaction
86 Management Discussion and Analysis of
Financial Status and Operating Results
95 Audit Committee’s Report
97 Report of Board of Directors’
Responsibilities in the Financial
Statements
98 Independent Auditor’s Report
100 Financial Statement
Sales (MB)
Net Profit (MB)
Total Asset (MB)
No. of Stores
2013 retail sales increased by 16% to Baht 40,112 million.
NPAT up 15% to Baht 3,068 million.
Mainly increasing from investment in stores expansionin 2013 and 2014.
Chanthaburi, Chumphon, Prachinburi, Kanchanaburi, Phrae, Phutthamonthon, Saraburi, Petchaboon, Chaiyapoom, Chiangrai and Loei
2013
2012
2011
2010
2013
2012
2011
2010
2013
2012
2011
2010
2013
2012
2011
2010
34,542
2,671
25,868
53
40,112
3,068
35,942
64
28,363
2,005
20,759
45
24,073
1,638
16,592
40
+15%
+16%
+39%
11 stores
HOME PRODUCT CENTER PLC. 01
ANNUAL REPORT 201302
Message from Chairman
The year 2013 was one of the most volatile periods for Thai economy as it was affected by situations both in Thailand and international countries. Thai politics was unstable and the economic activities, especially exports, became somewhat sluggish due to the economic slowdown of our trade partners, including the United States, Japan, and European countries. These factors resulted in a mediocre growth of Thai’s Gross Domestic Product (GDP) of only 2.9%, which was significantly lower than the expected growth figure of 4.5%-5%. Moreover, Home Improvement industry returned to its normal level after it had enjoyed an accelerated growth in 2012 as a result of Flooding Crisis having occurred in 2011.
Nevertheless, with its policy to continually expand branches, continued exploration of business opportunities, adjustment of product mix, unceasing improvement in services, boosting in administration and management efficiency, and effective execution of marketing strategies, HomePro was able to withstand those obstacles and impressively generated sales growth of 16.1% and net profit growth of 14.9% in 2013. The Company also executed a strategy to expanding new business, Mega Home, to increase the new customer base.
In 2014, the Company will continue to expand its network to seize business opportunities in order to maintain sales and profit growth. In addition, it will prepare business continuity plans and backup measures to get ready for any negative circumstances that may arise in domestic and international areas.
The Company wishes to receive the cooperation from all employees, as well as support from shareholders and the business partners to successfully achieve the planed target.
Lastly, the Company would like to express its sincere appreciation to those who have supported to the Company in every area. The Company would also like to provide a commitment to operate and grow its business with prosperity for the utmost benefit of the shareholders, suppliers, customers, and more than 9,000 employees across the company.
(Mr. Anant Asavabhokhin)Chairman
HOME PRODUCT CENTER PLC. 03
An unimpressive economic growth in 2013 as a result of uncertainties in Thailand and other countries led to the deceleration of the overall industry. However, HomePro was able to maintain its performance with its sale growth of 16.1% and net profit growth of 14.9%. These growth was contributed by many factors, including sales growth of existing stores, new sales generated by new stores, sales generated by HomePro EXPO exhibition, the increase in Private Brands products, increased income from rents, income from commercials and promotions, income from other services, and new business expansion.
In this year, the Company expanded 11 new branches including the relocation of Suratthani branch in order to accommodate the growing demands in the market. As of the end of 2013, there were 64 branches in the HomePro’s store network. Moreover, in the 4th Quarter of 2013, the Company also executed its proactive strategy by opening 2 Mega Home branches in Rangsit area, Pathumthani province and Mae Sod district, Tak province to offers full ranges of household and construction products, from structural materials, housing systems, household decorative products to home appliances. These assortments are offered in good prices and high standard of qualities to satisfy both professional builders and homeowners. In 2014, the Company plans to continually expand its branches both in Thailand and possibly into Malaysia.
In order to serve the continuous expansion of the branches, the Company has established a plan to improve its internal management efficiency by expanding the headquarter area. Its continuous efficiency enhancement of the internal management will strengthen the proficiency and advantage over
the competitors in terms of products and services, completely serving the demand from customers with the goal of utmost cus-tomer satisfaction.
In 2013, the Company’s HomeCard membership program consisted of more than 1.76 million members. The HomeCard helps increase the efficiency of the sales promotion activities, including the development of the Home Service for increasing acceptances from the customers, and providing services coverage nationwide
In terms of the social responsibility, the Company continues the Kids’ Toilets Project. In 2013, the Company had im-proved another 494 toilets in primary schools across Thailand to meet the national public toilets standard, accounting for 38 provinces, 135 schools, 1,803 toilets in total. And more than 40,000 students have received the benefit from this project.
With such an achievement, TRIS Rating affirmed the Company’s credit rating at “A+” with “Stable” outlook, and the Company would like to express our appreciation to all employees for their determination. We also hope that the shareholders and suppliers will continue to provide their kind support to the Company’s business operation.
Message from Managing Director
(Mr. Khunawut Thumpomkul) Managing Director
HomePro has continued expanding its new branches to provide goods and services to home lovers. In 2013, there were 11 newly opened branches, namely Chanthaburi, Chumphon, Prachinburi, Kanchanaburi, Phrae, Phutthamonthon 5, Saraburi, Phetchabun, Chaiyaphum, Chiangrai and Loei, including the relocation of Suratthani branch in order to accommodate the growing demands in the market. As of the end of 2013, HomePro had 64 branches nationwide, of which 21 branches are located in Greater Bangkok and another 43 branches in provinces.
Mega Home is a one-stop shopping center that offers full ranges of wholesale and retail housing and construction products, from structure and building materials, home systems, interior design products, to appliances and home goods. These assortments are offered in competitive price and high quality standard to satisfy both professional and homeowners. Its assortments comprise of more than ten thousands items to serve various customer groups, including end-users who purchase for their own usage, developers/builders who order materials to construct apartment buildings and hotels, and retailers who buy products for redistribution.
Store Expansion & New BusinessExtending networks, expanding services
HomePro Chanthaburi
HomePro Chumphon
HomePro Phrae
Mega Home Rangsit
HomePro Loei
HomePro Phutthamonthon 5
ANNUAL REPORT 201304
In the 4th Quarter, the Company executed its proactive strategy by opening 2 “Mega Home” stores - Mega Home Rangsit (Rangsit area) and Mega Home Mae Sod (Mae Sod district, Taak Province). These two branches are under the management and supervision of Mega Home Center Co., Ltd., a 99.99% subsidiary of HomePro.
Mega Home Rangsit
Mega Home Rangsi
t
Mega Home Maesod
Mega Home Maesod
HomePro Chaiyaphum
HomePro Phetchabun
HomePro Prachinburi
HomePro Saraburi
HomePro Chaing Rai
HOME PRODUCT CENTER PLC. 05
Together with variety of product selection to serve our customers, HomePro has continuously developed our Private Brand products for our customers’ choices with the good quality yet competitive prices. In 2013, the Company’s Private Brands were warmly welcomed from customers with support from both domestic and international suppliers. As a result, the Company currently has 36 private brand products and over 1,000 product items in total.
Private Brand ProductAdd more quality choices for our customers
ANNUAL REPORT 201306
With our true understanding of customer needs, HomePro has continuously strengthened the Home Services and increased its coverage to all stores in the country in order to provide complete solutions to its valued customers. Our services include 3D System Design, Installation Service, Maintenance Service and Home Improvement Service. Our services are provided by the qualified professionals who have the knowledge in their respective jobs and related products. Moreover, they can assist customers professionally to manage budget and time.
Home ServiceComplete Range of Services for Home Lovers
Behind the kitchen you want to show
Behind the joyful Shower“Home Service”
Installation ServiceInstallation/ moving/ solving problems involvingelectrical work, plumbing, flooring, sanitaryware and kitchen appliances installation.
Home Improvement Home renovation and furnishing based oncustomer requirements such as exterior andinterior painting.
Maintenance ServiceChecking and cleaning of electrical appliancessuch as air conditioner or washing machine.
3D Design ServiceInterior designing by 3D computer system
ANNUAL REPORT 201308
HomePro’s CardPrivileges for home lovers
Home Card / Professional Card
Home Card and Professional Card are the member cards for customers and the group of project owners, contractors, architects, engineers, interior designers, and other technicians. Customers with the card get a discount for purchasing products or services. Every purchase made with the card will accumulate points to redeem a cash equivalent for use on the next purchase. Besides that, the customers also get other privileges such as joining the DIY workshop such as Home Painting, FengShui Training etc. At the end of 2013, HomePro has more than 1.76 million registered members
HomPro Visa Platinum Credit Card
Under the concept “Complete your home, fulfill your lifestyle”
•ExclusivediscountsonavarietyofHomePro’sproductsandservice•Featuring0%interestforupto10monthsinstallmentplanaccording to terms and conditions •24hoursEmergencyHomeAssistanceServices--helpingyouwhen there is an emergency home accident, such as the electrical system problems, plumbing break, lost keys, dangerous animal in home, leakage roof etc.•24hoursLife’sConvenientServiceofferingfacilityandconvenience services including booking at famous restaurants and hotel reservations both in Thailand and abroad; ordering and delivering flowers, gifts or books; searching for detail of merchandises, services, tourist places, restaurants etc.•Cashbackcreditatparticipatinggasolinestations.•10MillionBahtcoverageondomesticandinternationaltravel accident insurance.•Delayedflightover6hoursinsurance
HOME PRODUCT CENTER PLC. 09
Corporate Social Responsibility : CSR
Kids’ ToiletSmile of appreciation
A part of your every shopping at HomePro will provide smiles to many children through “Kids’ Toilet Project”. The initiation of this project is due to many schools across Thailand have neither standard toilette nor good hygienic condition. As a way to give back to the society, HomePro and its business partners, in cooperation with the Department of Health, the Ministry of Public Health and Office of the Basic Education Commission, the Ministry of Education have examined and improved the school toilettes in order to enhance their standard to meet the national public toilette standard which consists of Healthy, Accessibility, and Safety (HAS).
Responsibility for sustainable development
Kids’ Toilet ina total of rooms
2 0 1 3
1 8 0 3
ANNUAL REPORT 2013010
From the beginning of the project in December 2006 till the end of 2013, HomePro have improved and delivered the toilettes in a total of 1,803 rooms from 135 schools, in 38 provinces across the country. More than 40,000 students have received the benefit from the project.
“This Smile Represents our True Appreciation”
Kids’ Toilet Project
The Company would like to express our sincere appreciation to all great supporters that enabled us to have an opportunity to share wonderful experiences with our Thailand’s next generation. You are truly part of such great contribution on the construction of clean and hygienic toilets for schools far away from the city under“Kids’ Toilets Project”. Together forever we will continueto maintain such useful synergy for the best hygienefor Thai children because we are proud to be Thaisand HomePro..belongs to Thai people.
HOME PRODUCT CENTER PLC. 011
Unit: MB
ANNUAL REPORT 2013012
Financial Information
ItemConsolidated Financial Statements
2013 2012 2011
Separate Financial Statements
2013 2012 2011
Liquidity Ratio
Liquidity ratio (time)
Protability Ratio
Gross Profit (%)
Profit from Operation (%)
Net Profit (%)
Return on equity (%)
Operation Efficiency Ratio
Return on assets (%)
Financial Analysis Ratio
Debts to Equity ratio (time)
Interest coverage ratio (time)
0.70
26.00
10.51
7.28
29.67
11.54
1.61
30.52
0.64
26.84
10.31
7.16
27.10
9.93
1.83
23.82
0.68
26.80
10.49
7.34
27.58
10.29
1.74
23.13
0.82
25.70
10.73
6.57
27.77
10.74
1.53
42.55
0.69
26.01
10.44
7.25
29.54
11.48
1.61
29.74
0.81
25.70
10.76
6.63
28.02
10.82
1.53
41.30
Total Assets
Total Liabilities
Equity
Sales
Total Revenues
Net profit
EPS (Baht)
Dividend per share (Baht)*
Paid-up Capital (Million Shares)*
25,868.37
15,941.10
9,927.28
34,541.55
36,969.30
2,670.79
0.28
0.407523
7,041.43
35,941.68
23,225.30
12,716.38
40,111.64
42,830.23
3,068.48
0.32
0.1853
9,589.55
34,870.21
22,136.99
12,733.23
39,933.59
42,521.43
3,119.93
0.33
0.1853
9,589.55
20,758.81
12,556.71
8,202.10
28,363.42
30,502.43
2,005.36
0.29
0.3088
5,836.72
25,796.71
15,904.39
9,892.32
34,542.73
36,843.48
2,651.55
0.28
0.407523
7,041.43
20,723.73
12,537.41
8,186.32
28,364.67
30,419.43
2,016.81
0.29
0.3088
5,836.72
Remark : In the Extraordinary Shareholders’ Meeting No. 1/2013 held on September 23, 2013, the meeting approved for the payment of interim dividends at the rate of 0.1853 Baht/share by dividing into cash dividends at the rate of 0.0186 Baht/share and stock dividend at the rate of 0.1667 Baht/share. The meeting also approved the increase of the registered capital for the amount of 1,370.21 million shares in order to support the payment of stock dividends.
ItemConsolidated Financial Statements
2013 2012 2011
Separate Financial Statements
2013 2012 2011
Home Product Center Public Company Limited was established on June 27, 1995 with the initial registered capital of Baht 150 million, being a joint venture between Land and Houses Group and American International Assurance Co., Ltd. The Company has been listed on the Stock Exchange of Thailand since October 30, 2001.
The Company was established with an objective to operate a retail business in home improvement segment by selling goods and providing complete range of services relating to construction, addition, renovation of buildings, houses, and residence places under the trade name of “HOMEPRO” which is the Company’s trademark. Rangsit branch is the first branch of the Company operating in September 1996. As of December 31, 2013, the Company has 64 branches in total, of which 21 branches are located in Bangkok and its vicinity and another 43 branches in upcountry provinces. There were 11 newly opened branches with “HomePro” format, i.e. Chanthaburi, Chumphon, Prachinburi, Kanchanaburi, Phrae, Phutthamonthon Sai 5, Saraburi, Phetchabun, Chaiyaphum, Chiangrai and Loei and also relocation at Suradthani branch. And 2 branches of “Mega Home” format in Rangsit, Pathumthani province and Mae Sod, Tak province.
HOME PRODUCT CENTER PLC. 013
General Information
The Structure of Business Group
Home Product Center Public Company Limited
Market Village Co., Ltd Home Product Center (Malaysia) SDN. BHD.
Mega Home Center Co., Ltd.
DC Services Center Co., Ltd.
Type of Business : Retailing of home improvement products as One Stop Shopping.
Type of Business : Management of leasing space together with provision of facilities services.Number of Held Shares : 99.99%
Type of Business: Retailing of home improvement products as One Stop Shopping in Malaysia.Number of Held Shares: 100%
Type of Business: Retailing and wholesaling of contruction and home improvement products.
Number of Held Shares: 99.99%
Type of Business: Warehousing and Distribution Service
Number of Held Shares: 99.99%
Location 96/27 Moo 9 Tambon Bangkhen, Amphoe Muang, Nonthaburi 11000 Telephone +66 (0) 2832 1000 Facsimile +66 (0) 2832 1400 Website www.homepro.co.th
Type of Business Selling goods and providing complete range of services relating to construction, addition, refurbishment, improvement of buildings, houses, and residence places as One Stop Shopping. Registration No. 0107544000043 Registered Capital 9,589,847,893 shares Paid-up Capital 9,589,550,988 shares
Name Market Village Co., Ltd Location 234/1 Petchkasem Rd., Tambon Hua Hin, Amphoe Hua Hin, Prachaub Kirikhan 77110 Telephone +66 (0) 3261 8888 Facsimile +66 (0) 3261 8800 Type of Business Management of leasing space together with provision of facilities services Number of Issued Shares 50,000 ordinary shares at par value of Baht 100 Number of Held Shares 49,993 shares
Name Home Product Center (Malaysia) SDN. BHD. Location Kuala Lumpur, Malaysia. Type of Business Retailing of home improvement products with full service support Number of Issued Shares 10,000,000 ordinary shares at par value of 1 Malaysia Ringgit Number of Held Shares 10,000,000 shares
Name Mega Home Center Co., Ltd. Location 49 Moo 5, Tambon Khlong Nueng, Amphoe Khlong Luang, Pathumthani 12120 Telephone +66 (0) 2516 0099 Facsimile +66 (0) 2516 0098 Type of Business Retailing and wholesaling of contruction and home improvement products Number of Issued Shares 5,000,000 ordinary shares at par value of Baht 100 Number of Held Shares 4,999,998 shares
Name DC Services Center Co., Ltd. Location 100 Moo 2 Tambon Lamsai, Amphoe Wungnoy, Ayutthaya 13170 Type of Business Warehousing and Distribution Number of Issued Shares 500,000 ordinary shares at par value of Baht 10 Number of Held Shares 499,997 shares
ANNUAL REPORT 2013014
Information of Home Product Center Public Company Limited
Information of company in which Home Product Center Plc. holds shares from 10 percent up
HOME PRODUCT CENTER PLC. 015
1. Rangsit100 Phaholyothin Rd., AmphoeThunyaburi, Pathumthanee 12110
2. Rattanathibet 6/1 Moo 6, Tambon Saothonghin, Amphoe Bangyai, Nonthaburi 11140
3. Fashion Island587, 589 Ramindra Rd., Khannayao, Bangkok 10230
4. Future Mart295 Rama 3 Rd., Bangkholeam, Bangkok 10120
5. Paradise Park61 Srinakarin Rd., Nongbon, Praves, Bangkok 10250
6. The Mall Bangkae 275 Moo 1, Petchkasem Rd., North Bangkae, Bangkae, Bangkok 10160
7. The Mall Korat 1242/2 Mittraphap Rd., Amphoe Muang, Nakhon Ratchasima 30000
8. Ratchadaphisek 125 Ratchadaphisek Rd., Dindang, Bangkok 10400
9. Ploenchit 55 Wave Place Building, Wireless Rd., Pathumwan, Bangkok 10330
10. Puket104 Moo 5, Tambon Rasada, Amphoe Muang, Phuket 83000
11. Chiangmai94 Moo 4, Chiang mai-Lampang Rd., Tambon Nong Pa Kruang, Amphoe Muang, Chiangmai 50000
12. Ramkhamhaeng 647/19 Ramkhamhaeng (Sukhaphibal 3) Rd., Huamark, Bangkapi, Bangkok 10240
13. Rama II 45/581 Moo 6, Samaedam, Bangkhunthien, Bangkok 10150
14. Prachachuen 96/27 Moo 9, Tambon Bangkhen, Amphoe Muang, Nonthaburi 11000
15. Latphrao 669 Latphrao Rd., Chompol, Chatuchak, Bangkok 10900
16. Pattaya 333 Moo 9, Tambon Nongprue, Amphoe Banglamung, Chonburi 20150
17. Chaengwatthana 113 Moo 5, Tambon Pakkret, Amphoe Pakkret, Nonthaburi 11120
18. Had Yai 677 Petchkasem Rd., Tambon Had Yai, Amphoe Had Yai, Songkhla 90110
19. Ratchapruk 82 Moo 2, Tambon Bang Khun Kong, Amphoe Bang Kruai, Nonthaburi 11130
20. Suvarnabhumi 99/28 Moo 1, Tambon Rachatawa, Amphoe Bangplee, Samutprakarn 10540
21. Hua Hin 234/1 Petchkasem Rd., Amphoe Hua-Hin, Prachuabkhirikhan 77110
22. Samui 1/7 Moo 6, Tambon Bophut, Amphoe Kho Samui, Suratthani 84320
23. Phitsanulok 959 Moo 10, Tambon Aranyik, Amphoe Muang, Phitsanulok 65000
24. Khonkaen 177/98 Moo 17, Tambon Naimuang, Amphoe Muang, Khonkaen 40000
25. Udonthani 89/20 Moo 9, Soi Bannonglek, Tambon Markkang, Amphoe Muang, Udonthani 41000
26. Suratthani 86 Moo 3, Tambon Wat Pradu, Amphoe Muang, Surat thani 84000
27. Petchkasem 224 Petchkasem Rd., Nongkhangplu , Nong Kham , Bangkok 10160
28. Chonburi 15/16 Moo 3, Tambon Huykapi, Amphoe Muang, Chonburi 20000
29. Ekamai-Ramindra 41 Praditmanutham Rd., Latphrao, Bangkok 10230
30. Rayong 560 Sukhumvit Rd., Tambon Noenphra, Amphoe Muang, Rayong 21000
31. Ayutthaya 80 Moo 2, Tambon Bangrod, Amphoe Bangpain, Ayutthaya 13160
32. Chiangmai - Hangdong 433/4-5 Moo 7, Tambon Mae-Hiya, Amphoe Muang, Chiangmai 50100
33. Krabi 349 Moo 11, Tambon Krabinoy, Amphoe Muang, Krabi 81000
34. Puket - Chalong61/10 Moo 10, Tambon Chalong, Amphoe Muang, Phuket 83130
35. Khao Yai288 Moo 11, Tambon Nong Nam Daeng, Amphoe Pakchong, Nakhonratchasima 30130
36. Nakhonpathom752/3 Petchkasem Rd., Tambon Huai-Charakhe , Amphoe Muang, Nakhonpathom 73000
37. Nakhonratchasima384 Mittraphap Rd., Amphoe Muang, Nakhonratchasima 30000
38. Lumlukka99 Moo 6, Tambon Buengkhamphroi, Amphoe Lumlukka, Pathumthanee 12150
39. Sukhaphiban 3101 Ramkhamheng Rd., Minburi, Bangkok 10510
40. Nakhonsithammarat89 Nakhon-Pakpanang Rd., Amphoe Muang, Nakhonsithammarat 80000
41. Chachoengsao 187/9 Chachoengsao - Bangpakong Rd., Tambon Namuang, Amphoe Muang, Chachoengsao 24000
42. Roi-et 116 Moo 3, Tambon Dong Lan, Amphoe Muang, Roi-et 45000
HomePro’s Branches Information
ANNUAL REPORT 2013016
43. Suphanburi 133 Malai Maen Rd., Tambon Ruayai, Amphoe Muang, Suphanburi 72000
44. Lopburi85 Moo 6, Tambon Thasala, Amphoe Muang, Lopburi 15000
45. Sakonnakhon689/1 Nittayo Rd., Tambon That Choeng Chum, Amphoe Muang,Sakonnakhon 47000
46. Trang196 Moo 4, Tambon Ban Kaun, Amphoe Muang, Trang 92000
47. Mega Bangna39 Moo 6, Tambon Bangkaew, Amphoe Bangplee, Samutprakan 10540
48. Buriram499 Moo 9, Tambon Isan, Amphoe Muang, Buriram 31000
49. Hat Yai (Kanchanavanich)33/40 Moo 5, Tambon Khohong, Amphoe Hat Yai, Songkla 90110
50. Nakhonsawan119/2 Moo 7, Tambon Bangmoung, Amphoe Muang, Nakhonsawan 60000
51. Mahachai68/98 Moo 8, Tambon Thasai, Amphoe Muang, Samutsakhon 74000
52. Ubonratchathani284 Moo 7, Tambon Chaeramae, Amphoe Muang, Ubonratchathani 34000
53. Ratchaburi208 Moo 13, Tambon Chedi Hak, Amphoe Muang, Ratchaburi 70000
54. Chanthaburi21/18 Moo 11, Tambon Plubpla, Amphoe Muang, Chanthaburi 22000
55. Chumphon63 Moo 11, Tambon Wang Phai, Amphoe Muang, Chumphon 86000
56. Prachinburi44/1 Moo 4, Tambon Bang Boribun, Amphoe Muang, Prachinburi 25000
57. Kanchanaburi15 Moo 1, Tambon Thalor, Amphoe Tha Muang, Kanchanaburi 71000
58. Phrae171 Moo 7, Tambon Pa Maet, Amphoe Muang, Phrae 54000
59. Phutthamonthon Sai 5198 Moo 1, Tambon Bang Toei, Amphoe Sam Phran, Nakhon Pathom 73210
60. Saraburi24/3 Moo 2, Tambon Takut, Amphoe Muang, Saraburi 18000
61. Phetchabun151 Moo 1, Tambon Chon Phrai, Amphoe Muang, Phetchabun 67000
62. Chaiyaphum164 Moo 7, Tambon Nongnasang , Amphoe Muang Chaiyaphum 36000
63. Chiangrai157 Moo 2 , Tambon Tasai, Amphoe Muang Chiangrai, 57000
64. Loei117 Moo 9, Tambon Na An, Amphoe Muang Loei, 42000
Mega Home’s Branches Information
1. Rangsit49 Moo 5, Tambon Khlong Nueng, Amphoe Khlong Luang, Pathum Thani 12120
2. Mae Sod1108 Moo 1, Tambon Tasailuad , Amphoe Mae Sod, Tak 63110
Auditor EY Office Limited (Formerly known as Ernst & Young Office Limited) 33rd Floor, Lake Rajada Office Complex, 193/136-137 Ratchadaphisek Rd., Klongtoey, Bangkok 10110 Tel. +66 (0) 2265 0777 Fax. +66 (0) 2264 0789-90
Legal Counsel Wissen & Co Ltd. 8th Floor Office # 3801, BB Building, 54 Sukhumvit 21 (Asoke) Rd., Klongtoey-Nua, Wattana, Bangkok 10110 Tel. +66 (0) 2259 2627 Fax. +66 (0) 2259 2630
Share Registrar Thailand Securities Depository Co., Ltd. 4th, 6-7th floor Stock Exchange of Thailand Building, 62 Ratchadaphisek Rd., Klongtoey, Bangkok 10110 Tel. +66 (0) 2229 2800 Fax. +66 (0) 2359 1262-3
Bond Registrar The Unsubordinated and Unsecured Debentures of Home Product Center Plc. 1/2011 Siam Commercial Bank Plc. 9 Ratchadapisek Rd., Jatujak, Bangkok 10900 Tel. +66 (0) 2256 2323-7 Fax. +66 (0) 2256 2406
The Unsubordinated and Unsecured Debentures of Home Product Center Plc. 1/2012 and The Unsubordinated and Unsecured Debentures of Home Product Center Plc. 1/2013 CIMB Thai Bank Plc. 44 Langsuan Rd., Lumpini, Patumwan, Bangkok 10330 Tel. +66 (0) 2626 7503-4 Fax. +66 (0) 2626 7542
Information of the referrals
HOME PRODUCT CENTER PLC. 017
Board of Directors Profile
Mr. Anant Asavabhokhin (63 years old)Chairman
Appointed as the Director on 29 May 2001
At the present, Mr. Anant is the director of 4 listed companies and 3 non-listed companies which are not doing business competingwith the Company.
Education/Training:- MBA, Thammasat University- M.S. Industrial Engineering, Illinois Institute of Technology, USA- Bachelor Degree, Civil Engineering, Chulalongkorn University- Thai Institute of Directors Association (IOD), 2004 Director Certification Program (DCP)- Training in 2013 : -
The Brief Working Experience1995 - Present Chairman Home Product Center Plc. (Home improvement retailing)2009 - Present Chairman LH Financial Group Plc. (Holding)2005 - Present Chairman Land and Houses Bank Plc. (Financial institution) Director L&H Property Co., Ltd. (Property development) Director L&H Sathorn Co., Ltd. (Property development)1985 - Present Chairman and Managing Director Land and Houses Plc. (Property development) Director Quality Houses Plc. (Property development)
Shareholding : 0.15%
Mr. Pong Sarasin (86 years old)Independent Director
Appointed as the Director on 29 May 2001
At the present, Mr. Pong is the director of 4 listed companies and 1 non-listed company which are not doing business competingwith the Company.
Education/Training:- Ph.D. (Hon.) Business Administration, Chulalongkorn University- Bachelor of Science in Business Administration, Boston University- Training in 2013 : -
The Brief Working Experience1995 - Present Independent Director Home Product Center Plc. (Home improvement retailing)2000 - Present Chairman Honda Automobile (Thailand) Co., Ltd. (Manufacture and distribution of automobiles)1996 - Present Chairman Shangri-La Hotel Plc. (Hotel)1994 - Present Director Rojana Industrial Park Plc. (Property development) Director Sammakorn Plc. (Property development)2000 - 2013 Chairman Thai Namthip Co., Ltd. (Soft drink distribution)
Shareholding : 0.23%
ANNUAL REPORT 2013018
Mr. Manit Udomkunatum (69 years old)Director and Chairman of the Executive Committee
Appointed as the Director on 29 May 2001
At the present, Mr. Manit is the director of 1 listed company and 8 non-listed companies which are not doing business competingwith the Company.
Education/Training:- Secondary - Thai Institute of Directors Association (IOD), 2004 Director Accreditation Program (DAP)- Training in 2013 : -
The Brief Working Experience2000 - Present Director and Chairman of the Executive Committee Home Product Center Plc. (Retail Home Center)2007 - Present Director and Chairman of the Executive Committee Elician Development Co., Ltd.2006 - Present Director and Chairman of the Executive Committee Shanghai Inn Co., Ltd. (Hotel) Director Panalee Co., Ltd. (Hotel)2004 - Present Director Koh Maphrao Island Co., Ltd. (Hotel)2003 - Present Director R L P Co, Ltd. (Holding)2001 - Present Chief Executive Director U S I Holding Co., Ltd. (Holding) Director Fashion People Co., Ltd. (Clothing) Director Active Nation Co., Ltd. (Sport Products Distributor)
Shareholding : 3.08%
Mr. Rutt Phanijphand (66 years old)Director, Executive Director and Chairman of the Remuneration and Compensation Committee
Appointed as the Director on 20 December 2001
At the present, Mr. Rutt is the director of 4 listed companies and 3 non-listed companies which are not doing business competingwith the Company.
Education/Training:- M.S. Business Administration, Fort Hays Kansas State College, Hays, Kansas, USA- Bachelor Degree of Science, Kasetsart University- Thai Institute of Directors Association (IOD), 2003 Director Accreditation Program (DAP), 2005 Director Certification Program (DCP), 2010 Financial Institutions Governance Program (FGP)- Training in 2013 : -
The Brief Working Experience2007 - Present Executive Director and Chairman of the Remuneration and Compensation Committee2001 - Present Director Home Product Center Plc. (Retail Home Center)2013 - Present Director CIMB Securities International (Thailand) Plc. (Investment)2010 - Present Chairman Land and Houses Fund Management Co., Ltd. (Fund Business)2009 - Present Director, Chairman of Executive Director LH Financial Group Plc. (Holding)2005 - Present Director and Chairman of Executive Director Land and Houses Bank Plc. (Financial institution) Independent Director and Chairman of the Compensation Committee Banpu Plc. (Energy)2001 - Present Director, President and Managing Director Quality Houses Plc. (Property development)2006 - 2009 Director and Audit Committee IRPC Plc. (Energy)
Shareholding : -
HOME PRODUCT CENTER PLC. 019
Mr. Apilas Osatanon (79 years old)Independent Director and Chairman of the Audit Committee
Appointed as the Director on 29 May 2001
At the present, Mr. Apilas is the director of 1 listed company and 1 non-listed company which are not doing business competingwith the Company.
Education/Training:- Ph.D. (Hon.) Agricultural Technology- Thai Institute of Directors Association (IOD), 2004 Director Accreditation Program (DAP)- Training in 2013 : -
The Brief Working Experience2010 - Present Independent Director and Chairman of the Audit Committee Home Product Center Plc. (Home improvement retailing)2013 - Present Director and Audit Committee Bangkok Glass Co., Ltd. (Packaging)1996 - 2009 Chairman Tokyo Leasing (Leasing)
Shareholding : -
Mr. Thaveevat Tatiyamaneekul (68 years old)Independent Director and Audit Committee
Appointed as the Director on 29 May 2001
At the present, Mr. Thaveevat is the director of 1 listed company and 2 non-listed companies which are not doing business competingwith the Company.……………………………………………………………………………………Education/Training:- Primary- Thai Institute of Directors Association (IOD), 2004 Director Accreditation Program (DAP)- Training in 2013 : -
The Brief Working Experience2010 - Present Independent Director and Audit Committee Home Product Center Plc. (Home improvement retailing)2013 - Present Chairman of Executive Director Maneepin Co., Ltd. (Holding)1989 - Present Chairman of Executive Director Star Fashion (2008) Co., Ltd. (Apparel manufacturer and distributor)
Shareholding : -
ANNUAL REPORT 2013020
Mr. Chanin Roonsamrarn (66 years old)Independent Director, Audit Committee and Nomination and Remuneration Committee
Appointed as the Director on 3 October 2005
At the present, Mr. Chanin is the director of 2 listed companies and 1 non-listed company which are not doing business competingwith the Company.
Education/Training:- MBA, Fort Hays State University, Kansas, USA- Thai Institute of Directors Association (IOD), 2002 Director Certification Program (DCP), 2002 The Role of Chairman (RCM)- Training in 2013 : -
The Brief Working Experience2005 - Present Independent Director, Audit Committee and Nomination and Remuneration Committee Home Product Center Plc. (Home improvement retailing)2010 - Present Chief Executive Director SBL Leasing Co., Ltd. (Leasing)2003 - Present Independent Director, Audit Committee, Chairman of Risk Management Committee and, Human Resource and Remuneration Director The Siam Commercial Samaggi Insurance Plc. (Insurance)1986 - Present Independent Director, Audit Committee, Remuneration Committee and Nomination Committee Thai Reinsurance Plc. (Insurance)1996 - 2009 President and Chief Executive Officer The Siam Industrial Credit Plc. (Financial Institution)
Shareholding : -
Mr. Apichat Natasilpa (56 years old)Director and Remuneration and Compensation Committee
Appointed as the Director on 16 August 2001
At the present, Mr. Apichat is the director of 1 listed company and 2 non-listed companies which are not doing business competingwith the Company.
Education/Training:- MBA, University of Southern California- Thai Institute of Directors Association (IOD), 2004 Director Accreditation Program (DAP) - Training in 2013 : -
The Brief Working Experience2001 - Present Director and Remuneration and Compensation Committee Home Product Center Plc. (Home improvement retailing)2013 - Present Independent Director, Audit Committee, and Remuneration and Compensation Committee Wind Energy Holding Co., Ltd. (Energy)1999 - Present Director Pine Bridge (Thailand) Limited (Investment advisory)
Shareholding : -
HOME PRODUCT CENTER PLC. 021
Mr. Khunawut Thumpomkul (57 years old)Director, Executive Director and Managing Director
Appointed as the Director on 29 May 2001
At the present, Mr. Khunawut is the director of 2 listed companies and 3 non-listed companies which are not doing business competingwith the Company.
Education/Training:- MBA, National Institute of Development Administration - Thai Institute of Directors Association (IOD), 2001 Director Certification Program (DCP)- Training in 2013 : -
The Brief Working Experience2001 - Present Director and Remuneration and Compensation Committee Home Product Center Plc. (Home improvement retailing)2013 - Present Director LH Financial Group Plc. (Holding)2012 - Present Executive Director Land and Houses Bank Plc. (Financial Institution)2011 - Present Director Home Product Center (Malaysia) SDN. BHD. (Retailing)2005 - Present Director Market Village Co., Ltd. (Leasing Space Management)
Shareholding : 1.44%
Mr. Naporn Soonthornchitcharoen (55 years old)Director and Executive Director
Appointed as the Director on 29 May 2001
At the present, Mr. Naporn is the director of 4 listed companies and 3 non-listed companies which are not doing business competingwith the Company.
Education/Training:- MBA, Thammasart University- Bachelor Degree of Civil Engineering, Chiangmai University- Thai Institute of Directors Association (IOD), 2005 Director Certification Program (DCP), 2004 Director Accreditation Program (DAP)- Training in 2013 : -
The Brief Working Experience1995 - Present Director and Executive Director Home Product Center Plc. (Home improvement retailing)2013 - Present Chairman of Executive Director2002 - Present Director and Senior Vice President Land and Houses Plc. (Property development)2009 - Present Director LH Financial Group Plc. (Holding)2005 - Present Director Land and Houses Bank Plc. (Financial institution)1995 - Present Director Land and Houses Northeast Co., Ltd. (Property development) Director Land and Houses North Co., Ltd. (Property development)1994 - Present Director Quality Construction Products Plc. (Construction material manufacturing)1994 - 2011 Director Bangkok Chain Hospital Plc. (Hospital)
Shareholding : -
ANNUAL REPORT 2013022
Mr. Joompol Meesook (65 years old)Director
Appointed as the Director on 29 May 2001
At the present, Mr. Joompol is the director for the Company only.
Education/Training:- MBA, Thammasart University- B.S. ARCH., Far Eastern University (FEU), Philippines- B.S. CE., Far Eastern University (FEU), Philippines- Thai Institute of Directors Association (IOD), 2004 Director Accreditation Program (DAP) 2008 Director Certification Program (DCP)- Training in 2013 : -
The Brief Working Experience1995 - Present Director Home Product Center Plc. (Home improvement retailing)2006 - 2010 Director The Confidence Co., Ltd. (Property development)1993 - 2010 Director Casa Ville Co., Ltd. (Property development) Director and Advisor of President and CEO Quality Houses Plc. (Property development) Director Quality Construction Products Plc. (Construction material manufacturing)
Shareholding : 0.03%
Mrs. Suwanna Buddhaprasart (59 years old))Director
Appointed as the Director on 2 July 2001
At the present, Mrs. Suwanna is the director of 3 listed companies and 5 non-listed companies which are not doing business competingwith the Company.
Education/Training:- MBA, Chulalongkorn University- Thai Institute of Directors Association (IOD), 2004 Director Accreditation Program (DAP) 2007 Director Certification Program (DCP)- Training in 2013 : -
The Brief Working Experience1995 - Present Director Home Product Center Plc. (Home improvement retailing)2011 - Present Chairman LH Financial Group Plc. (Holding)2010 - Present Director Idea Fitting Co., Ltd. (Interior design and furnished)2003 - Present Director Casa Ville Co., Ltd. (Property development) Director Q.H Management Co., Ltd. (Project after-sale service)2000 - Present Director and Senior Executive Vice President Quality Houses Plc. (Property development) Director Q.H. International Co., Ltd. (Property development) Director The Confidence Co., Ltd. (Property development)2005 - Present Director Land and Houses Bank Plc. (Financial Institution)
Shareholding : -
HOME PRODUCT CENTER PLC. 023
Mr. Weerapun Ungsumalee (51 years old)Senior Vice President-Operation
Education / TrainingMaster of Engineering,Asian Institute of Technology
The Brief Work Experience2005 - Present Senior Vice President Home Product Center Plc. (Home improvement retailing)
Shareholding 0.05%
Ms. Jarusopha Thumkathikanon (54 years old)Senior Vice President - Merchandising Soft-Line
Education / TrainingBachelor of Faculty of Economics, The University of The Thai Chamber of Commerce
The Brief Work Experience2003 - Present Senior Vice President Home Product Center Plc. (Home improvement retailing)
Shareholding 0.08%
Ms. Jariya Sorathorn (55 years old)Senior Vice President - Merchandising Hard-Line
Education / TrainingMaster’s Degree Program in Social Work, Thammasat University
The Brief Work Experience2007-2013 Senior Vice President2005 - 2007 Vice President - The Power Home Product Center Plc. (Home improvement retailing)
Shareholding 0.06%
Ms. Siriwan Paimsethasin (55 years old)Senior Vice President - Merchandising Home Electric Product
Education / TrainingDiploma in Business Computing,DhonburiRajabhat University
The Brief Work Experience2011 - Present Senior Vice President2007 - 2011 Vice President - Appliance Products Home Product Center Plc. (Home improvement retailing)
Shareholding 0.03%
Ms. Tharathip Trimankhong (53 years old)Senior Vice President - International Merchandising
Education / TrainingJunior High School
The Brief Work Experience2000 - Present Senior Vice President Home Product Center Plc. (Home improvement retailing)
Shareholding 0.27%
Mr. Kasem Pinmonteartong (55 years old)Senior Vice President-Operation
Education / TrainingMBA, Ramkhamhaeng University
The Brief Work Experience2013 - Present Senior Vice President2001 - 2013 District Manager Home Product Center Plc. (Home improvement retailing)
Shareholding 0.001%
Management Profile
ANNUAL REPORT 2013024
Mr. Anuchar Jitjaturunt (50 years old)Senior Vice President - International Business
Education / TrainingMBA, Sasin Graduate Institute of Business Administration of Chulalongkorn University
The Brief Work Experience2002 - Present Senior Vice President Home Product Center Plc. (Home improvement retailing)
Shareholding 0.11%
Mr. Chaiyuth Karunyasopon (55 years old)Senior Vice President-Distribution Center
Education / TrainingBachelor of Faculty of Finance,Ramkhamhaeng University
The Brief Work Experience2007 - Present Senior Vice President Home Product Center Plc. (Home improvement retailing)
Shareholding 0.02%
Mr. Nitat Aroontippaitoon (48 years old)Senior Vice President - Human Resource and Loss Prevention
Education / TrainingMBA, National Institute of Development Administration
The Brief Work Experience2010 - Present Senior Vice President2005 - 2010 Vice President - Internal Audit Home Product Center Plc. (Home improvement retailing)
Shareholding 0.04%
Ms. Sudapa Chamod (40 years old)Senior Vice President -Information and Communication Technology
Education / TrainingMBA, Asian Institute of Technology
The Brief Work Experience2012 - Present Senior Vice President1999 - 2012 Home Product Center Plc. (Home improvement retailing) Senior Manager Accenture Solutions Co.,Ltd. (Management Consulting)
Shareholding 0.00%
Mr. Vathunyu Visuthikosol (49 years old)Senior Vice President - Business Development
Education / TrainingMBA Georgia State University, US
The Brief Work Experience2002 - Present Senior Vice President Home Product Center Plc. (Home improvement retailing)
Shareholding 0.07%
Mrs. Pornsook Damrongsiri (48 years old)Senior Vice President-Inventory Management
Education / TrainingMS-CIS, Colorado State University
The Brief Work Experience2013 - Present Senior Vice President2007 - 2013 Home Product Center Plc. (Home improvement retailing) Senior Manager Ek-Chai Distribution System (Retailing - Tesco Lotus)Shareholding 0.00%
Mr. Nat Jarlitchana (53 years old)Senior Vice President - Marketing
Education / TrainingMBA, Kasetsart University
The Brief Work Experience2006 - Present Senior Vice President Home Product Center Plc. (Home improvement retailing)
Shareholding 0.07%
Ms. Wannee Juntamongkol (49 years old)Senior Vice President - Accounting and Finance and Company Secretary
Education / TrainingMBA, Sasin Graduate Institute of Business Administrationof Chulalongkorn University
The Brief Work Experience2005 - Present Senior Vice President Home Product Center Plc. (Home improvement retailing)
Shareholding 0.07%
Vision
To be the leader of home center business in Thailand and South East Asia.
Mission
1. We will offer the value in terms of products, services, and prices to our customers, to be the first on customer’s mind.2. We will collaborate with our business alliance to improve efficiency which leads to increasing of mutual benefits.3. We will give the importance to and develop personnel to have working efficiency and responsibility to customers.4. We will manage professionally according to the good governance, and to build good relationship with society and community.5. We will seek new business opportunity for the future and to create reasonably incremental value for associated parties.
Business Objectives
In accordance with the vision to be the leader of home center business in Thailand and South East Asia as One Stop Shopping, the Company therefore continuously plans to expand its network to take business opportunities to accommodate the growing demands in the market. The expansion emphasizes on covering strategic areas bordering neighboring Asean Economic Community (AEC) and growth potential areas. The Company plans to futher open new outlets with the next milestone of 80 stores within 2016 in both Bangkok and upcountry. These strategies including development of service and selection process to add the variety of products. At the end of the year 2013, the Company had a total of 64 Homepro stores and 2 Mega Home stores nationwide.
To be the leader of home center business in Thailand and South East Asia as One Stop Shopping, besides the regular format of “Homepro”, the Company also executed its proactive strategy by opening the center for wholesale and retail under the name of “Mega Home” in order to accommodate the demands in building material and household products market. The new business offers full ranges of housing and construction products to satisfy professional builders, contractors and homeowners. Besides, the Company also plans to continually expand its branches into Malaysia which will open the first branch at the end of 2014.
HOME PRODUCT CENTER PLC. 025
Natural of Business
ANNUAL REPORT 2013026
Nature of Business of Home Product Center Public Company Limited
The Company was established with objective to operate a retail business in home improvement segment by selling goods and providing complete range of services relating to construction, addition, refurbishment, renovation, improvement of buildings, houses, and residential places through One Stop Shopping Home Center under the trade name of “HomePro” which is the Company’s trademark. Presently, the Company has the nature of business as follows;
1. Home improvement retailing, by having 2 groups of merchandise categories as follows:
To provide the services relating to retail business
Due to most of the Company’s products having instruction details and working process which customers need to understand, the Company has provided various kinds of related services by giving consultation and useful information for customers to make decision to select the products that mostly match the usage objectives. In addition, the Company has provided “Home Services” that includes 3D system design and HomeCare consisting of:
1. Installation Service provides services on installation, moving and solving problems. 2. Maintenance Service provides checking and cleaning of electrical appliances. 3. Home Improvement Service provides home renovation and furnishing.
Furthermore, HomePro also provides services of technician and contractor selection and placement service, products exchange service, as well as arranging DIY demonstration (Do It Yourself) and workshop for customers etc.
2. To provide space rental service for retail tenant stores
The Company has arranged for its rental space in some branches to provide the service for retail tenant shops. At the same time, the Company has developed the format of its branches so called “HomePro Village” which operates the business in the form of full service shopping center. Inside the project, in addition to HomePro’s branch, there are areas of shopping center in which most of tenants consist of supermarkets, restaurants, banks, bookstores, and IT shops etc.
As of December 31, 2012, the Company has a total of 4 branches in the format of HomePro Village: Suvannabhumi branch, Hua Hin branch, Phuket-Chalong branch and Ratchapruk branch.
Home improvement, Bathroom and Sanitary ware, Kitchen, Home appliances, Electrical equipment and Lighting
Bedding, Furniture and Household decorative goods
Hard Line Solf Line
HOME PRODUCT CENTER PLC. 027
Nature of Business of Subsidiary
1. Market Village Co., Ltd. (“Market Village”) was incorporated, on May 26, 2005, located at 234/1 Petchkasem Road, Tambon Hua-Hin, Amphoe Hua-Hin, Prachaubkirikhan Province, in which Home Product Center Plc. holds 99.99% of total shares. Presently, its registered capital is Baht 5,000,000. Market Village was formed with objectives to manage rental space for Home Product Center Plc., and to provide utilities services to tenants. In the first quarter of 2006, it commenced operation on the “Hua-Hin Market Village” project which is located at Petchkasem Road, Amphoe Hua-Hin, Prachaubkirikhan.
2. Home Product Center (Malaysia) Sdn. Bhd. was incorporated on July 28, 2011, located at Kuala Lumpur, Malaysia, in which Home Product Center Plc. holds 100% of total shares. Its registered capital is 10,000,000 Malaysia Ringgit. Home Product Center (Malaysia) Sdn. Bhd. was formed with objective to operate a retail business in home improvement segment in Malaysia. Presently, it is still not yet operational.
3. Mega Home Center Co., Ltd. was incorporated on July 4, 2012, located at 49 Moo 5, Tambon Khlong Nueng, Amphoe Khlong Luang, Pathum Thani 12120, in which Home Product Center Plc. holds 99.99% of total shares. Its registered capital is Baht 500,000,000. Mega Home Center Co., Ltd. was established with objective to operate a retail and wholesale business in contruction and home improvement products. Presently, the Company operates 2 branchs which are Rangsit, Pathumthani province and Mea-sod, Tak province.
4. DC Services Center Co., Ltd. was incorporated on September 4, 2013, located at 100 Moo 2 Tambon Lamsai, Amphoe Wungnoy, Ayutthaya 13170, in which Home Product Center Plc. holds 99.99% of total shares. Its registered capital is Baht 5,000,000. DC Services Center Co., Ltd. was formed with objective to operate a Warehousing and
Distribution.
Revenue Structure
Revenue of Company and subsidiaries consist of sales revenue and other revenues. Total structure of revenue can be classified by the line of products as follows:
1. Revenue from retailing
- Hard Line
- Soft Line
2. Revenue from project sales1
3. Revenue from Subsidiary
Total Revenue from Sales
4. Other income2
Total
28,049.1
5,936.9
555.6
-
34,541.6
2,427.7
36,969.3
32,246.0
7,010.4
675.7
179.5
40,111.6
2,718.6
42,830.2
75.3
16.4
1.6
0.4
93.7
6.3
100.0
75.9
16.1
1.4
-
93.4
6.6
100.0
23,187.7
4,855.5
320.2
-
28,363.4
2,139.0
30,502.4
76.0
16.0
1.0
-
93.0
7.0
100.0
Remark : 1. Revenue from project sales is from the purchase of project owners which cannot be categorized per product lines. 2. Other income includes revenue from rental of space, in-store promotion fee etc.
Item2013 2012 2011
Amount Amount Amount% % %
Unit: MB
ANNUAL REPORT 2013028
Supply of Products
The Company sources products by:
1. Purchase order. The Company makes the purchase order of products categorized by product lines from both domestic and overseas manufacturer or sales agent, in which the Company mainly emphasizes on quality and variety of products.
2. Make to order. The Company orders manufacturing of Private Brand and House Brand from both domestic and overseas manufacturer. The Company will initially select the manufacturer by considering factors including being certified of manufacturing standard, reputation, quality of service and types of harmonized operation. Moreover, the Company also visits the factory from time to time and inspects products in order to ensure the overall quality.
Currently, the Company sources products from more than 1,100 manufacturers and sales agents in which offers an opportunity to introduce their products. Selection process is under vendor evaluation in 4 aspects: Production capacity, Product quality, Quality of service, and Quality of logistics. Throughout the time, manufacturers and sales agents provided good support and cooperation, in terms of advertisement, public relation, joint sale promotion, joint planning of sale strategies, support and joining new branch to be opened.
Market and Competitive Condition
The Company is the leader in home improvement retailing which offers a full range of complete services. As for competitors, the Company has classified other operators who sell goods in similar nature as follows:
1. Operators of Home Center
HomeWorks is a retail business unit of home products by Central Retail Corporation Group of Companies. There are currently 7 branches in operation.
Thai Watsadu is a retail business unit of construction materials by Central Retail Corporation Group of Companies. It operates in form of warehouse store to sell construction materials, home improvement goods and equipments. It has currently 35 branches in operation.
Global House operates the business of selling products in the form of warehouse store. Products include construction materials, decorative goods, tools, equipments to be used for construction, addition, decoration of house and garden. It is managed by the Siam Global House Plc. There are currently 27 branches in operation.
Do Home operates the business of selling products in the form of warehouse store. Products include construction materials, tools, and equipments to be used for construction. It is managed by Ubonwatsadu Co., Ltd. There are currently 5 branches in operation.
In the past few years, the real estate market seems to be continually expanding so that the demand for home improvement products, including the transition of urban society was growth in both Bangkok and Upcountry. Moreover, private investments have increased modestly to engage in Asean Economic Community building efforts which influence commercial real estate markets in all over the country.
The Company believes that this business still has plenty of potential and marketing opportunities and that the increase of such business operators will help stimulate consumers familiarity and more rapidly change their behavior to purchase products from Modern Trade home centers.
HOME PRODUCT CENTER PLC. 029
2. Specialty Store.
Retail businesses who focus on selling specific goods as follows:
Ceramic, Sanitaryware, and Kitchenware stores i.e. Boonthavorn, Grand Home Mart. Furniture and Home decoration stores i.e. Index Living Mall, IKEA Retail stores that sell only construction materials i.e. Cement Thai Home Mart. Other Specialty Stores.
3. Operators of large retail business in the group of Hypermarket.
These businesses mainly aim at selling of consumer goods and edible products, not home products. While some groups of products sold may overlap, their main customer targets are different.
ANNUAL REPORT 2013030
Risk Factors
The Company separately explains the risk factors which may affect the operations of business as follows:
1. Business Risk
In 2013, Thai economy underwent continued slow down. Consumer Confidence Index and private investment slowed down amidst many negative pressures on domestic consumption, such as concerns over rising living expenses, household debt upsurge, delayed in the government’s infrastructures investment, and increased tension on political situations beginning in end of the year. Moreover, exports were unable to drive Thai economy as expected, even though an early sign of global economic recovery in the second half of the year.
There was a mixed signal in Thai real estate market in 2013. The growth of residential real estates in Bangkok and provincial areas seem slowed down; while the investment in retail of construction materials and home improvement businesses continued its uptrend momentum. In addition, in the provinces that share borders with neighboring countries in ASEAN Economic Community (AEC) and tourist-destination provinces were still at up trend. In any case, the Company was able to increase the number of its branches and expand into new businesses.
The Company, however, has closely kept abreast of situation in order to plan and find measures and strategies to prevent the risks that may occur, and to operate the business so as to successfully reach the planned target.
1.1 Inventory
As of December 31, 2013, 2012, and 2011, the Company had net Inventory equal of Baht 6,505.64 million, Baht 5,352.54 million, and Baht 4,382.50 million respectively. The average inventory turnover period of 2013, 2012, and 2011 were at 74 days, 70 days, and 70 days respectively.
However, the Company has been continuingly attempting to increase the turnover of Inventory, whether by developing of service quality of sales persons, continual sales promotion, improving products display and store ambience, regularly adding new products to the store, including attempting to reduce the volume storing level.
For the reduction of inventory, since 2006, the Company has expanded space of the distribution center. As of December 31, 2013, the total area amounted to 136,000 square meters and the Company also plans to expand the distribution center area, in order to support the new store expansion in the future and to manage inventory more efficiently.
1.2 Investment
As of December 31, 2013, the Company has branches in operation totaling 64 branches. The new branches in 2013 were Chanthaburi, Chumphon, Prachinburi, Kanchanaburi, Phrae, Buddhamonthon Sai 5, Saraburi, Phetchabun, Chaiyaphum, Chiangrai, and Loei and also relocation at Suradthani branch.
Since the Company has a policy to continuously increase branches, there may be a risk with respect to the result of performance of new branches that may not be as forecasted. This will affect the result of the overall operation. The Company avoids the risk by analyzing the investment return before every investment decision, and preparing the action plan and annual budget. When a new branch starts operating, the results of operations and progress plan are being followed up on a monthly basis. This will facilitate the Company to set the plan for handling the risk and to solve problems which may occur in timely manner.
HOME PRODUCT CENTER PLC. 031
1.3 Operation
The Company has the risk of loss or damage of property due to the operation of the sale personnel, and has set up a work unit to handle with such risk, that are the Risk management Committee and Loss Prevention Unit, which is responsible for laying preventive and safety system against various risks of the Company including the risk that the employees may incur from the operation.
1.4 Accounts Receivable
The Company has divided the customers into 2 groups: retail customer and group of contractor and project owner. The retail customer is customer at store who purchases products by cash, the group of contractor and project owner is customer who purchases products by credit term with lage volume. The major sales revenue comes from retail customer. As in 2013, the proportion of cash sales was at 98.3% to total sales. For 2012 and 2011, the proportion was 98.4% and 98.9% respectively. However, for the credit sales, the Company will consider only project that has reliable financial status, which the company has analyzed the result of operation and financial status or having the contractor place with a letter of guarantee as security against debt payment, etc.
As of December 31, 2012, 2011, and 2010, the Company has accounts receivable of Baht 329.66 million, Baht 312.72 million, and Baht 216.34 million, in which mainly consisted of trade accounts receivable from project owners sales and credit card sales. The allowance for doubtful bad debts was set to be approximately Baht 1.34 million, Baht 1.34 million, and Baht 1.74 million, which the management have already estimated the debt repayment period and have evaluated financial status of each debtor. The Company believes that the allowance for doubtful bad debts has been set sufficiently and appropriately.
For other receivables, they mainly consisted of receivables form in store promotion and area rental and related service. The Company had other receivables of Baht 1,059.28 million, and the allowance for doubtful bad debts of Baht 1.98 million.
1.5 Procurement
Price risk and quantity risk remain the main risk factors for retail business. The Company procures and purchases supplies from both domestic and international venders. However, most of the products come from domestic manufacturers and selling agent. The Company has a predetermined plan to procure products and put in place under a specific operational unit responsible for product survey and supplier selection process, in which only suppliers with reliable manufacturing standards are selected. This is to assure proper product quality and product availability of all time.
In addition, the Company has a policy to procure and purchase supplies from several qualified manufacturers and selling agent to reduce the risk of highly depending on suppliers (supplier risk), to maintain inventory balance, and to bargain the company’s negotiation power in the long run.
ANNUAL REPORT 2013032
1.6 Management and Administration
The Company distributed its share in the Stock Exchange of Thailand. There is no individual shareholder who holds more than 50% of the total shares; neither is there any major shareholder or high-level executive who has conflicts of interest with the Company. In addition, the Company has strictly adhered to the Code of Best Practice for Directors of Listed Companies, issued by the Stock Exchange of Thailand. The Company is strongly and solidly determined to continue its business based on the rules of Good Corporate Governance by applying professional ethics, transparent administration and information disclosure in every level of the organization. This results in a highly-systemic, professional management in each business line and significant reduction in the risks arising from mismanagement.
1.7 Financial management
Interest rate volatility is one of the major factors affecting a business that depends on external capital. In the past year, overall interest rates and inflation rates remained in their low ranges, posting limited risk to the Company’s short-term financial management. Moreover, the Company’s management team has built in a mechanism to monitor and manage financial risks by analyst an extensive cost before making investment decisions using any financial resources and tools, including internal cash flows, bank loans, or debentures. This is purpose to keep the Company’s cost of capital in a proper and balanced level in line with the asset investment structure and shall be in line with the Company’s policy.
As of December 31, 2013, the Company has baht 2,100 million of long-term bank debt, with the purpose to invest. Its principles and interests will be repaid from 2012 to 2016. The Company also issued debentures for domestic sales for baht 6,300 million, the principle being repaid between 2013 and 2016. According to the agreement between the Company and the debtor financial institution, the Company is obliged to maintain its D/E ratio of no more than 1.75 times for the debenture issued before 2013 and 2.5 times for the debenture issuing since 2013. As of December 31, 2013, D/E ratio was 0.77 times, which was far from the threshold level. However, the Company is facing the risk of breaching the covenant should its D/E ratio go beyond the threshold level. This may disrupt the Company’s financial liquidity and financial status accordingly.
2. Politics Risk
Political instability that was beginning since the end of 2013 was another factor causing weakness of Thai domestic consumption. However, household products are basic necessities with naturally stable demand. Though political uncertainty was pressuring consumption in general, it is expected to post only a short-term effect on the Company’s sales. Careful project feasibility study, as well as reduction or avoidance of the Company’s risk factors, is the major guideline in the Company’s risk management and business administration going forward.
3. Competitive Risk
The Company operates a retail business with products relating to houses and residential places where there are both direct and indirect competitors such as retailing shops, department stores, specialty stores, and general small retail shops. The Company has differentiated itself by focusing on offering a variety of products and complete range of services for construction, repairing, decoration, and addition. Also, the Company provides a team of experts for several kinds of system work such as electrical system, plumbing, sanitation system and related installation, etc.
Furthermore, the Company has concentrated on strengthening efficiency of internal management in order to improve, its capability and advantages against both local and international competition in the future.
HOME PRODUCT CENTER PLC. 033
4. Legal Risk
The laws which are relevant and may cause a risk to business operation are as follows:
1. The Bangkok Metropolis Town Planning Law
The Town Planning Law has the objectives to be the guidance on the national development and to support the expansion in the future. If there shall be modification of the town planning in the future, the Company will not be affected from this limitation, as the Company had put its investment to cover areas in major cities of almost all provinces. On the other hand, it is being seen as a restriction on business expansion of competitor, which is a benefit to the Company.
2. The Trade Competition Act
In 2006, the Trade Competition Commission has adopted its resolution on the Guideline for Unfair Trade Practices in the Wholesale/Retail Business, by virtue of the Trade Competition Act B.E. 2542 into 8 ways as follows: 1. Unfair price fixing. 2. Unfair request for economic benefit. 3. Unfair returning of goods. 4. Unfair use of agreement of sell on consignment. 5. Coercion to Purchase or to pay for service fee. 6. Unfair use of personnel of manufacturer/vendor. 7. Refusing to accept products by order/customized made as its own private brand, or of House Brand. 8. Other unfair practices.
Such 8 clauses of Guideline for unfair trade practices have affected the modern retail business. However, in order to perform the business in conjunction with the above announcement, the Company has agreed with its business partner in amending the agreement to be more specific and clearer.
3. The Safeguard Measure on Increased Imports Act B.E 2550 (2007)
In 2012, there was the appeal to issue Safeguard Measures Against the Increased Imports of Glass Block Products according to the Protection Measures Against Importation of Additional Goods Act B.E. 2550 (2007) (the “Safeguard Act”). This has minor impact to the Company as the Company can switch to buy from some other sources.
In 2013, the measure was extended enforcement for another 3 years from the date of 15 January 2014-14 January 2017. Moreover, there was no complaint in 2013.
4. The Industrial Product Standards Act
The open market trade of the ASEAN Community oncoming will result in the increasing of imported products and goods. The Thai’s government should adapt measures to control and protect the consumer from imports. One of the measures is to set out the decree to standardize the imported product/goods. For instance; some of the items that formerly can be imported without permission will be requested to get the prior approval for Industrial Product Standards that may affect the Company on the flexibilities of importing products that may be more controlled in the future.
5. Risk from the major shareholder held paid-up capital more than 25%
As at October 31, 2013, Land and Houses Plc. held 2,484,924,021 shares or 30.23% of the Company’s paid-up capital which makes Land and Houses Plc. can control any resolution unless the resolutions which legally require more than three-fourths voting from the shareholders’ meeting.
ANNUAL REPORT 2013034
Shareholding Structure
On the closing date as of October 31, 2013, the Company had registered capital in the total of 8,228,193,829 shares and paid-up capital in the total of 8,219,539,851 shares. The top ten shareholders consist of:
Foreign Limit
Foreign shareholders are capable to hold shares and appear their names on the Company’s asset registration of totaling not exceeding 30% of the issued shares and paid up. As of December 27, 2013, the shares of the Company held by foreigner was at approximately 9.5%.
Director who is representative of the group of major shareholders
These following directors are the representative of major shareholders which hold shares of the Company at more than 20%
1.2.3.4.5.6.7.8.9.10.11.
Land and Houses Public Company LimitedQuality Houses Public Company LimitedMr. Niti OsathanuklorMr. Manit Udomkunnatum American International Assurance Company LimitedThai NVDR Company LimitedCHASE NOMINEES LIMITED 1Mr. Joon WanavitMr. Khunawut ThumpomkulSarasin Co., Ltd.Others
1. Mr. Anant Asavabhokhin2. Mr. Rutt Phanijphand3. Mr. Joompol Meesook4. Mrs. Suwanna Buddhaprasart5. Mr. Naporn Soonthornchitcharoen
Land and Houses Plc.Quality Houses Plc.Quality Houses Plc.Quality Houses Plc.
Land and Houses Plc.
ChairmanDirectorDirectorDirectorDirector
2,484,924,0211,625,110,505388,384,853253,120,000210,000,185168,923,166127,672,027126,373,450118,462,238104,723,733
2,611,845,673
30.219.84.73.12.62.11.61.51.41.331.7
Rank Name of natural person / Juristic Person
Name - Surname
No. of Shares
Representative of Shareholders Position
% of total Paid-up shares
Remark - The above table shows the number of shares before the distribution of interim stock dividend on November 15, 2013, which the Company has distributed to shareholders whose names appeared on the closing date of the registration book on 31 October 2013, at the rate of the existing 6 shares per 1 share of stock dividend. - As of December 27, 2013, free float rates of the company was 42.90% - As of October 31, 2013, the shares of the Company held by local institution was at approximately 20.74%
Board of Directors
Managing Director
Nomination andRemuneration Committee
Executive Directors Audit Committee
Internal Audit DepartmentRisk Management
Committee
Senior Vice PresidentDistribution Center
Senior Vice PresidentOperation
Senior Vice PresidentMerchandising Hard-Line
Senior Vice PresidentMerchandising Soft-Line
Senior Vice PresidentInternational Merchandising
Senior Vice PresidentInventory Management
Senior Vice PresidentMerchandising Home Electric Product
Senior Vice PresidentBusiness Development
Senior Vice PresidentInternational Business
Senior Vice PresidentMarketing
Senior Vice PresidentInformation and Communication
Technology
Senior Vice PresidentHuman Resource and Loss Prevention
Senior Vice PresidentAccounting and Finance
HOME PRODUCT CENTER PLC. 035
Organization Chart
1. Mr. Anant Asavabhokhin
2. Mr. Rutt Phanijphand
3. Mr. Joompol Meesook
4. Mr. Apichat Natasilapa
5. Mrs. Suwanna Buddhaprasart
6. Mr. Manit Udomkunnatum
7. Mr. Naporn Soonthornchitcharoen
8. Mr. Khunawut Thumpomkul
9. Mr. Pong Sarasin
10. Mr. Apilas Osatananda
11. Mr. Thaveevat Tatiyamaneekul
12. Mr. Chanin Roonsamrarn
Chairman
Director, Executive Director and Chairman of the Nomination
and Remuneration Committee
Director
Director and Nomination and Remuneration Committee
Director
Director and Chairman of the Executive Director
Director and Executive Director
Director, Executive Director and Managing Director
Independent Director
Independent Director and Chairman of the Audit Committee
Independent Director and Audit Committee
Independent Director, Audit Committee and Nomination and
Remuneration Committee
Name - Surname Position
Management
The structure of Company’s management consists of the Board of Directors, Sub-Committees, and Executive Directors. There are 3 sets of the Sub-Committees i.e. Executive Director, Audit Committee, and Nomination and Remuneration Committee, having details as follows:
1. Board of Directors
As at December 31, 2013, the Company’s Board of Directors consists of 12 persons including:
(1) 1 Director who is the management (2) 11 Directors who is not the management, which are as follows: - Independent Directors 4 persons (account for one-third of board members) - Non-managing Directors 7 persons
The Structure of the Company’s Board of Directors has a system of checks and balances by means of;
(1) The Independent Directors account for one-third of board members, and being independent from the management and major shareholders of the Company. (2) Consist of three having substantial knowledge, experiences and skill to review the Financial Statements and to perform other duty as Audit Committees. (3) Having clearly separated its roles and responsibilities from those of management. (4) In the past 2 years, all directors have never been the employee or partner of EY Office Limited (formerly known as Ernst & Young Office Limited) which is the external audit firm of the Company.
ANNUAL REPORT 2013036
Authorized Signatory Directors on the Company
1. Mr. Anant Asavabhokhin 5. Mr. Manit Udomkunnatum 2. Mr. Joompol Meesook 6. Mr. Naporn Soonthornchitcharoen 3. Mr. Apichat Natasilapa 7. Mr. Khunawut Thumpomkul 4. Mrs. Suwanna Buddhaprasart
Two of the seventh authorized signatory Directors are to co sign with the company’s stamp.
Roles and Responsibilities of the Board of Directors
Board of directors has clearly seperates responsibilities and authority of core business and subsidiary according to type of transactions mainly to decentralize responsibility authorize base on the duties delegated and guildline to the Company’ managements and employees. Scope of authority and responsibilities of the Board of directors including decide on important policies and strategies, work plans, budgets of a particular department, and dividend policy.
1. To manage the Company, in compliance with the Company’s objectives and Articles of Association and the lawful resolutions of shareholders’ meeting, and has power to perform any act specified in Memorandum of Association.
2. The Board has power to appoint directors as the Executive Directors in a number as determined by the Board, comprising of Chief Executive Director, Deputy Chief Executive Directors, who will perform any tasks designated by the Board of Directors.
3. The Board may appoint any person(s) to operate the Company’s businesses under the supervision of the Board or empower the said person(s) to have power as deemed suitable by the Board. At the time deemed appropriate by the Board, the Board may revoke, cancel, or change the said power.
4. The Board must hold a meeting at least once every 3 months.
5. The directors must not operate the business of the same nature as and being in competitive with the Company’s business or be a partner of the ordinary partnership, or be a partner with unlimited liabilities of the limited partnership or be a director of a private company or other companies of the same nature as and being in competition with the Company’s business, whether for his/her benefits or other person(s) benefits unless it is notified to the shareholders’ meeting prior to the resolution for his/her appointment.
6. The director must immediately inform the Company if he/she has direct or indirect stake in any contract or even holds shares or debentures in the Company and its affiliates.
7. The director, who has interest in any issue, shall have no right to vote on that issue.
8. Investment propositions concerning store expansion or high value non-routine investments except for the following issues must be approved by shareholders first: - Matters that laws and regulations of the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) require the resolutions from the Shareholder’s Meeting. - The related transaction being worth more than 3% of the latest financial statements’ net tangible assets. - The acquisition or disposition of core assets with value more than 50% of the latest financial statements’ assets.
9. In the event of tie votes, the Chairman of the Board will have a casting vote.
HOME PRODUCT CENTER PLC. 037
Role and Responsibility of Chairman
1. Ensure effective operation of the Board and its committees in conformity with the highest standards of corporate governance.
2. Ensure effective communication with shareholders, host governments and other relevant constituencies and that the views of these groups are understood by the Board.
3. Set the agenda, style and tone of Board discussions to promote constructive debate and effective decision-making.
4. Ensure that all Board committees are properly established, composed, operated and build an effective and complementary Board.
5. Ensure comprehensive induction programs for new directors and updates for all directors as and when necessary.
6. Support the Managing Director in the development of strategy and, more broadly, to support and advise the Managing Director.
7. Promote effective relationships and communications between non-executive directors and members of the Group Executive Committee.
Independent Director
“Independent Director” means the director who is independent in expressing his opinion to the operation of the Company, must be a person who has no involvement or interest to the result of operation either directly or indirectly. The qualifications of the Independent Director are as follows:
1. Hold share not more than 1% of paid up capital of the Company, affiliates company, joint company, associated company, including the shares held by the related person.
2. Being independent either directly or indirectly of both financial and management of the Company or joint company or the management or major shareholders of the Company, and having no benefit or interest in such manner within 2 years before being appointed as the Independent Director, unless the Board of Director has carefully considered and see that such participation in having benefit or interest will not affect the duty performing and the independence in giving an opinion.
3. Must not be the Director who has been appointed as the representative to maintain the interest of the Director of the Company, major shareholders, or shareholders who are related to the major shareholders of the Company.
4. Must not participate in management and must not be employee, staff or consultant who receives regular salary in the Company, affiliate company, joint company, company or major shareholder of the Company.
5. Must not be related person or relatives of the executive or major shareholders of the Company.
6. Capable to perform his duty and express opinion or report result of duty performing as assigned by the Board of Directors, freely and not under the control of the Executive or major shareholders of the Company, including related person or close relatives of such person.
7. No other character that causes the inability to give opinion to operation of the Company independently.
ANNUAL REPORT 2013038
Terms of the Director of the Company
According to every Annual General Shareholders Meeting, the directors shall retire from the position of one-third, the directors who have been longest in position shall retire. A retiring director is eligible for re-election, and beside the retirement, the directors may leave from his position when:
1. Resignation 2. Death 3. Lacking of qualifications or possess prohibited character under Section 68 of the Public Company Act B.E. 2535 4. The Shareholders Meeting resolved to dismiss under Section 76 of the Public Company Act B.E. 2535 5. Dismissal ordered by the Court
2. Sub - Committees consist of 3 sets of directors i.e. Executive Directors, Audit Committee, and Nomination and Remuneration Committee, detail is as follows:
2.1 Executive Directors
Roles and Responsibilities
1. To consider and screen the issue required primary decision marking prior to be proposed for the Board of Directors’ approval. 2. To consider investment, branches expansion, annual budget allocation and propose the strategies plan to the Board of Directors.
Terms of holding office
1. Executive Directors shall retire when 1.1) Completion of term 1.2) Leaving from being the Director of the Company 1.3) Resignation 1.4) Death 1.5) The Board of Director has resolution to leave from the position.
2. In case of resigning, the resignation letter shall be submitted to the Chairman of the Company not less than 30 days in advance, which shall be approved by the Board of Director.
3. In case of any vacancy other than by rotation, the Board of Directors shall appoint person who is qualified to be Executive Director, in order to fill up number of directors as stipulated in the regulations by the Board of Directors.
1. Mr. Manit Udomkunnatum
2. Mr. Naporn Soonthornchitcharoen
3. Mr. Khunawut Thumpomkul
4. Mr. Rutt Phanijphand
Chairman of the Executive Director
Executive Director
Executive Director
Executive Director
Name - Surname Position
HOME PRODUCT CENTER PLC. 039
Roles and Responsibilities
1. Review the financial statement of the company to be appropriately made and accurate according to the Generally Accepted Accounting Principle with sufficient disclosure.
2. Review that the Company has proper and efficient internal control and internal audit system.
3. Review that the Company shall comply with laws regarding securities and Stock Exchange, regulations of the Stock Exchange of Thailand or laws relating to business of the Company.
4. Consider the related transactions or transactions that may have conflict of interest to be in compliance with relevant laws and regulations.
5. Review that the Company has proper and efficiency risk management system.
6. Review and jointly consider with the auditor the financial report, remarks and suggestions.
7. Consider, select, propose to appoint person who is independent to be an auditor of the Company and propose remuneration of the auditor to the Board of Directors of the Company.
8. Consider the independence of internal audit department, also approve the appointment, relocation and termination of employment, including to consider result of annual performance of the chief of internal audit.
9. Consider and approve regulations of internal audit office.
10. Consider and approve annual internal audit plan including to consider the scope of audit and audit plan of internal audit and the auditor of the Company, in order to have supportive connections.
11. Harmonize the understanding into the same line between Audit Committee, Management, Internal Auditor and External Auditor.
12. Review and consider the result of audit reporting and recommendation.
13. Review and amend the regulations of Audit Committee usually once a year to be up to date and appropriate with the organizational environment.
2.2 Audit Committee consists of:
1. Mr. Apilas Osatananda
2. Mr. Thaveevat Tatiyamaneekul
3. Mr. Chanin Roonsamrarn
Chairman of the Audit Committee
Audit Committee
Audit Committee
Name - Surname Position
Remark : 1. Mr. Chanin Roonsamrarn is the Audit Committee who has financial knowledges and experiences to review financial statement of the Company. 2. The Audit Committee’s secretary and the Internal Audit Chief is Mr. Aryuratas Chai-anan, Assist Vice President - Internal Audit.
ANNUAL REPORT 2013040
14. Carry on examination of the matters notified by the external auditor. In case the auditor finds doubtful behavior that the director, manager or person who is responsible for the operation of the Company has committed an offence as stipulated in the Securities and Stock Exchange Act (The 4th Issue) B.E. 2551, and report the result of preliminary examination to the Office of the Securities Exchange Commission and auditor of the Company within 30 days from the date receiving notification from the auditor.
15. Perform any other act as stipulated by law or the Board of Directors under approved by the Audit Committee.
16. Making report on the directing and supervising of the business activities of the Audit Committee, by disclosing it in the annual report, which such report must be signed by the Chairman of the Audit Committee and must consist of minimum information as follows:
16.1 Opinion in relation to accuracy, completeness, reliability of the financial report of the Company. 16.2 Opinion in relation to sufficiency of internal control system of the Company. 16.3 Opinion in relation to the compliance with the law of Securities and Stock Exchange and regulations of the Stock Exchange or law relating to business of the Company. 16.4 Opinion in relation to the appropriate of the External auditor. 16.5 Opinion in relation to the transaction that may have a conflict of interest. 16.6 Number of the Audit Committee’s meeting, and the attending to the meeting of each Audit Committee. 16.7 Overview opinion or remarks that the Audit Committee have received from performing his duty under the charter. 16.8 Other information that the shareholders and general investors ought to know, under the scope of duty and responsibility which have been assigned by the Board of Directors of the Company.
Terms of holding office
1. Taking position for 3 years of each time, including additional appointment and removal from Audit Committee.
2. In case retire from position, such person may be re-appointed.
3. Audit Committee shall leave from the position when:
3.1) Completion of term 3.2) Leave from being a director of the Company 3.3) Resignation 3.4) Death 3.5) Lacking of qualification to be an Audit Committee under this regulations or by the rules of the Stock Exchange of Thailand. 3.6) The Board of Director has resolution to remove from the position.
4. In case of resigning, the resignation letter shall be submitted to the Chairman of the Company not less than 30 days in advance, the approval shall be made by Board of Directors who shall then send copy of resignation letter to the Stock of Exchange of Thailand.
5. In case of any vacancy other than by rotation, the Board of Director shall appoint person who is qualified to be an Audit Committee in order to fill up the number of Audit Committee as stipulated in regulations. Persons who will be appointed as the Audit Committee shall be in position only for the time period remaining of the former Audit Committee, and shall inform the Stock of Exchange of Thailand.
HOME PRODUCT CENTER PLC. 041
2.3 Nomination and Remuneration Committee consists of:
1. Mr. Rutt Phanijphand
2. Mr. Chanin Roonsamrarn
3. Mr. Apichat Natasilapa
Chairman of the Nomination and Remuneration Committee
Nomination and Remuneration Committee
Nomination and Remuneration Committee
Name - Surname Position
Remark: On January 10, 2011, the Nomination and Remuneration Committee No. 1/2011 has a resolution to appoint Mr. Nitat Aroontippaitoon, Senior Vice President - Human Resource and Loss Prevention, to be the Nomination and Remuneration Committee’s secretary.
Roles and Responsibilities
1. Select persons who deserve to be nominated as the new Directors, or select of Managing Director.
2. Determine the procedures and regulations on selection of Directors or Managing Director to ensure the transparency.
3. Set up the procedures and criterions of paying which have been fair and proper remuneration and other benefits to the Board of Directors and Sub-Committee appointed by the Board of Directors, and then propose to the Shareholders meeting for approval.
4. Consider and guide on determining remuneration and other benefits concerning duty and responsibility of the Managing Director including consider the criterions and evaluation of operation of the Managing Director in order to determine annual remuneration from the annual operation and performance.
5. Review the structure of criterions of remuneration on items 3 and 4 to fit with duty, responsibility, and operation result of the Company to be in line with market condition.
6. Consider salary budget, annual merit increase and annual reward, welfare, structure and various procedures criteria in relation to staff remuneration including other benefits of personnel of the Company and its subsidiary.
7. Prepare operation report presenting to the Board of Directors at least once a year. Set up policy of overall Employee Stock Option Plan as proposed by the Managing Director.
8. Perform other duties as assigned by the Board of Directors.
Terms of holding office
1. Nomination and Remuneration Committee shall leave from the position when
1.1) Completion of term 1.2) Leave from being a Director of the Company 1.3) Resignation 1.4) Death 1.5) The Board of Director has resolution to remove from position.
2. In case of the resigning, the resignation letter shall be submitted to the Chairman of the Company of not less than 30 days in advance, approved by the Board of Directors.
ANNUAL REPORT 2013042
3. In case of any vacancy other than by rotation, the Board of Director shall appoint person who is qualified to be the Nomination and Remuneration Committee, in order to fill up the number as stipulated in the regulations by the Board of Directors.
Risk Management Committee
The Company recognizes the importance of implementing risk management and internal control policies for every areas of business operation. By the end of 2012, the Board of Directors had given out policy to the management to gather and analyze risk factors that may have impact on the business operation. In 2013, the Company had assessed risk factors so as to determine appropriate risk management policies of the Company. A Risk Management Committee was appointed on 12 February 2014 to evaluate and formulate company-wide risk management policies as well as establish risk management protocol in order to minimize potential impact. The management and every business units had jointly assess, monitor risk both internal and external risk factors and potential impact that may arise and jointly drafted risk management plan to address risk factors that are relevant to the Company so that business risk will be minimized at an acceptable level.
In addition, the Board of Directors also recognizes the importance of internal control system which led to the establishment of Internal Control Unit to monitor operational efficiency and effectiveness and analyze adequacy of internal control and risk management systems. The Internal Control Unit is also responsible for ensuring that business operation of the Group is in compliance with relevant laws, regulations and rules applicable to the Company and its subsidiaries by adopting international internal control standard of COSO (The Committee of Sponsoring Organizations of the Tread way Commission) and Enterprise Risk Management system to ensure effectiveness of internal control and risk management systems.
Composition and qualification of the Risk Management Committee
Risk Management Committee reports directly to Managing Director. The Committee comprises representatives from the Company’s major departments or specific department (risk owner). Risk Management Committee comprises from 6 business units as follows to cover the majority of risks of the Company: - Accounting and Finance - Operation - Supply Chain Management Supply Chain Management - Procurement - Human Resource and Loss Prevention - Information Technology (IT) - Office of Internal Audit serves as secretariat of the Risk Management Committee
Duties and Responsibilities
1. To draft the policy and risk management framework and prepare risk management system manual to seek endorsement from the Board of Directors. 2. To consider and provide advice to determine acceptable risk level (risk appetite) of the Company. 3. To assess the risk of the Company, to define procedures to eliminate risk and to draft Company-wide risk management procedures. 4. To report significant risks, including status of risks and the progress in dealing with such risks to the Board of Directors at least once per quarter. 5. To provide support to ensure that risk management procedures will be successfully implemented, to provide preventive measures to reduce risk to an acceptable level and to promote continuous improvement of business workflows and risk management procedures. 6. To monitor performance to ensure that business operation follows the Company’s guidelines with sufficient and appropriate risk control mechanism. 7. To review risk management policy at least annually to ensure that risk management procedures are up-to-date and appropriately cover overall business operation.
HOME PRODUCT CENTER PLC. 043
Selection of Directors and Managing Director
1. Selection of Directors
The Company appointed the Nomination and Remuneration Committee, which consists of 1 Independent Director from totaling of 3 persons, to determine selection of appropriate person in accordance with the Company policy to be nominated as the Director or Managing Director, by considering persons who have knowledge, capability and experience as required by the Company such as the appropriate of the number of persons, structure, and director’ skill, and must not have the prohibited qualification under the rules of the Securities Exchange Commission and Stock Exchange of Thailand, the relevant laws, rules or other regulations.,
Nomination and Remuneration Committee emphasizes on transparent selection of new committees by considering from existing committee lists, nominated from shareholder, and registered member from Thai Institute of Directors (IOD). Upon approval, the Board of Directors will propose to Shareholders Meeting based upon transparent information.
Criteria of vote to appoint the Company’s Director in the Shareholders Meeting:
1. Each Shareholder has the vote equivalent to one vote per one share held. 2. Each Shareholder shall use all of his/her voting rights under item 1 to elect one person or more persons as the Director, but is not capable to share his/her varied voting rights to any person. 3. A person, who receives highest votes gradually order would be elected as director subject to the number of Directors allowed to be elected in such meeting. In the event of persons who have been elected in the lower order have received equal votes but there will be over the number of allowed or elected Directors in such election, the Chairman of such Meeting shall have a casting vote.
In 2016, there were 4 Directors who are retired by rotation as follows: 1. Mr. Joompol Meesook, 2. Mrs. Suwanna Buddhaprasart, 3. Mr. Thaveevat Tatiyamaneekul, and 4. Mr. Chanin Roonsamrarn. The Nomination and Remuneration Committee, having considered in accordance with the criteria of selection, viewed that all 4 directors have the qualifications required according to the Public Limited Company Act B.E. 2535 and also have knowledges, abilities, and experiences in business skills relating to the Company’s operation. In this regard, such matter has been proposed through the resolution of the Board of Directors of the Company in order to be presented as an agenda in the Annual General Meeting of Shareholders of 2012 in which the meeting, then, has approved to re-appoint the said directors to their office for another term.
2. Selection of Managing Director
For selecting Managing Director, the Nomination and Remuneration Committee has the duty to preliminary determine selection of appropriate person who have knowledge, capability and experience as required by the Company, including has abilities to manage business to achieve the company’s objectives and goal as stipulated by the Board of Directors. The appropriate person would be proposed to appoint by the Board of Directors.
Roles and Responsibilities of Managing Director
As resolved in the Board of Directors Meeting no. 7/2544 on 21st June 2001 and the Board of Directors Meeting no. 9/2544 on 16th August 2001, the Managing Director who has authority to manage the Company as assigned by the Board of Directors and shall strictly and carefully manage the Company according to the framework or budget approved by the Board of Directors, and maintain the best interest of the Company and shareholders. Authorization of the Directors also covers other matters as follows:
1. Daily Operation and, management of the Company.
2. Approval of expense on operation, expense of selling and administrative and capital expenditure according to the budget approved by the Board of Directors, however, not including the loan and guarantee.
3. Filling the post, appointing, removing, relocating, promoting, reducing or cutting salary or wages, disciplinary punishment to the staff and employees, and order the staff and employee to leave from position according to the regulations as stipulated by the Board of Directors.
ANNUAL REPORT 2013044
4. Other operation as assigned by the Board of Directors, by having following authorities: - Having authority to administrate under the objectives, regulations, policy, rules, order, and resolution of the Board of Directors meeting and the resolution of the Shareholders Meeting. - Having authority to operate and enter into juristic act, agreement, order or any letter for contacting with the government authority, State Enterprise, and other person, including authorities to act as necessary and proper in order to succeed on the above mentioned acts. - Having authority to appoint other person to be proxy to act on specific work, which must be under the rules, regulations, or order that the Board of Directors or as imposed by the Company.
However, the Managing Director is unable to approve transaction that himself or person who may have conflict of interest in any other ways with the Company or its subsidiary.
Company Secretary
On 20th March 2008, the Board of Directors has resolution to appoint Ms. Wannee Juntamongkol as the Company Secretary in order to comply with the “Securities and Stock Exchange Act (4th Issue) B.E. 2551”. The Company has already notified the name and place to retain documents of the Company to the Securities and Exchange Commission on 26th August 2008.
Company Secretary’s Profile
Name : Ms. Wannee Juntamongkol (49) % Shareholding : 0.07 Family Relationship : -
Education : - MBA, Sasin Graduate Institute of Business Administration of Chulalongkorn University - Commerce and Accountancy of Chulalongkorn University
Training : 2005 - Company Secretary Program, Institute of Directors Association (IOD) 2008 - Laws and regulations of the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) Program for the Company Secretary by Faculty of Law of Chulalongkorn University
Experience : 2005 - Present - Senior Vice President, Accounting and Finance Home Product Center Plc. (Home Improvement Retailing)
Authority of Secretary of the Company
1. Facilitate for activities of the Board of Directors.
2. Follow up and coordinate with relevant person in order to be in compliance with the resolution of the Board of Directors and that of shareholder meeting, and closely report the result of such operation.
3. Arrange schedules of the Board of Directors meeting and Sub-Committees meetings, including conducting the Board of Directors meeting and shareholder meeting
4. Arrange and maintain documents as follows: - Director registration. - Notice calling for the Board of Directors Meeting, Minutes of the Board of Directors Meeting, and the Annual Report of the Company. - Notice calling for the Shareholders Meeting and Minutes of the Shareholders Meeting.
5. Maintain the report on interests which have been reported by the directors or executives.
6. Coordinate with relevant organization such as the Securities and Exchange Commission, and ensure that all information relevant to the company is disclosed, accurately and transparently.
HOME PRODUCT CENTER PLC. 045
7. Giving legal advices and related regulations and the principles of Good Corporate Governance to the Board of Directors in accordance with the law.
8. Manage other matters as stipulated by the Capital Market Supervisory Board.
9. Conduct the Board Orientation Program and provide suggestion as required by new director.
10. Perform other duties as assigned by the Board of Directors.
3. Management as December 31, 2013 consists of:
1. Mr. Khunawut Thumpomkul
2. Mr. Weerapun Ungsumalee
3. Mr. Kasem Pinmonteartong
4. Ms. Jarusopha Thumkathikanon
5. Ms. Siriwan Paimsethasin
6. Ms. Jariya Sorathorn
7. Ms. Tharathip Trimankhong
8. Mr. Chaiyuth Karunyasopon
9. Mrs. Pornsook Damrongsiri
10. Mr. Vathunyu Visuthikosol
11. Mr. Anuchar Jitjaturunt
12. Mr. Nat Jarlitchana
13. Ms. Sudapa Chamod
14. Mr. Nitat Aroontippaitoon
15. Ms. Wannee Juntamongkol
Managing Director
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Operation
Operation
Merchandising - Soft Line
Merchandising - Home Electric Product
Merchandising - Hard Line
International Merchandising
Distribution Center
Inventory Management
Business Development
International Business
Marketing
Information and Communication Technology
Human Resource and Loss Prevention
Accounting and Finance
Name - Surname Position Department
Note : 1. Mr. Kasem Pinmonteartong has been appointed since January 1, 2013 2. Ms. Pornsook Damrongsiri has been appointed since January 1, 2013 3. Ms. Jariya Sorathorn has been retired since January 1, 2014
ANNUAL REPORT 2013046
1.
Mr. An
ant
Asav
abho
khin
2.
Mr. Ru
tt Ph
anijp
hand
3.
Mr. Jo
ompo
l Mee
sook
4.
Mr. Ap
icha
t Na
tasilpa
5.
Mrs. Suw
anna
Bu
ddha
pras
art
6.
Mr. Man
it Ud
omku
nnat
um
7.
Mr. Na
porn
Soon
thornc
hitcha
roen
8.
Mr. Kh
unaw
ut
Thum
pomku
l
9.
Mr. Po
ng
Sarasin
10. Mr. Ap
ilas
Osa
tana
nda
11. Mr. Th
avee
vat
Tatiy
aman
eeku
l
12. Mr. Cha
nin
Roon
samrarn
13. Mr. Wee
rapu
n Un
gsum
alee
14. Mr. Ka
sem
Pinm
ontearnton
g
15. Ms.
Jaruso
pha
Thum
kathika
non
16. Ms.
Siriw
an
Paim
sethas
in
17. Ms.
Jariy
a So
rathorn
18. Ms.
Tharat
hip
Triman
khon
g
19. Mr. Cha
iyuth
Karuny
asop
on
20. Mrs. Pornsuk
Da
mrong
siri
21. Mr. Va
thun
yu
Visuthiko
sol
22. Mr. An
ucha
r Jit
jaturunt
23. Mr. Na
t Ja
rlitch
ana
24. Ms.
Suda
pa
Cha
mod
25. Mr. Nita
t Ar
oontippa
itoon
26. Ms.
Wan
nee
Juntam
ongk
ol
Cha
irman
Director
Director
Director
Director
Director
Director
Director a
nd M
D
Inde
pend
ent D
irector
Inde
pend
ent D
irector
Inde
pend
ent D
irector
Inde
pend
ent D
irector
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
Senior V
ice
Pres
iden
t
- - - - - - -
Cha
irman
- - - - - - - - - - - -
Director &
MD
- - -
Director
Director
- - - - - - -
Cha
irman
- - - - - - - - - - - - -
Director &
MD
- - -
Director
- - - - - - -
Cha
irman
- - - - - - - - - - - -
Director
Director &
MD
- - -
Director
- - - - - - -
Cha
irman
- - - -
Director
- - - - -
Director &
MD
- - - - -
Director
Director
Name
- Su
rnam
eHo
me
Prod
uct
Center Plc.
Subs
idiary
Marke
t Villa
ge C
o., L
td.
Home
Prod
uct C
enter
(Malay
sia) S
DN. B
HD.
Meg
a Ho
me
Center
Co., Ltd
.DC
Servic
es C
enter
Co., Ltd
.
Det
ail o
f Dire
ctor
s an
d M
anag
emen
t who
are
Aut
horiz
ed to
Con
trol S
ubsi
diar
y
HOME PRODUCT CENTER PLC. 047
ANNUAL REPORT 2013048
Details of the changes in Company’s shareholding of the Directorsas at December 31, 2013
1. Mr. Anant Asavabhokhin Spouse and minor children
2. Mr. Rutt Phanijphand
Spouse and minor children
3. Mr. Joompol Meesook Spouse and minor children
4. Mr. Apichat Natasilapa
Spouse and minor children
5 Mrs. Suwanna Buddhaprasart Spouse and minor children
6. Mr. Manit Udomkunnatum
Spouse and minor children
7. Mr. Naporn Soonthornchitcharoen Spouse and minor children
8. Mr. Khunawut Thumpomkul Spouse and minor children
9. Mr. Pong Sarasin Spouse and minor children
10. Mr. Apilas Osatananda
Spouse and minor children
11. Mr. Thaveevat Tatiyamaneekul
Spouse and minor children
12. Mr. Chanin Roonsamrarn
Spouse and minor children
Chairman
Director, Executive Directorand Chairman of the Nomination and Remuneration Committee
Director
Directorand Nomination and Remuneration Committee
Director
Director and Chairman of the Executive Director
Director and Executive Director
Director, Executive Director and Managing Director
Independent Director
Independent Directorand Chairman of the Audit Committee
Independent Directorand Audit Committee
Independent Director,Audit Committeeand Nomination and Remuneration Committee
10,672,363-
-
-
2,134,466-
-
-
--
216,960,000
-
-
-
101,525,304
-
15,790,897-
-
-
-
-
-
-
3,853,909-
-
-
770,779-
-
-
- -
78,346,667
-
-
-
36,677,965
-
6,168,935-
-
-
-
-
-
-
14,526,272-
-
-
2,905,245-
- -
- -
295,306,667
-
-
-
138,203,269
-
21,959,832-
-
-
- -
-
-
0.15-
-
-
0.03-
-
-
--
3.08
-
-
-
1.44
-
0.23-
-
-
-
-
-
-
Name - Surname PositionA number of Shareholding
as at 31 Dec 2013
ChangeIn 2013
A number of Shareholding
as at 31 Dec 2012
Holding(%)
Note : Minor children are persons under 20 years of age.
HOME PRODUCT CENTER PLC. 049
Details of the changes in Company’s shareholding of the Managementas at December 31, 2013
1. Mr. Weerapun Ungsumalee Spouse and minor children
2. Mr. Kasem Pinmonteartong Spouse and minor children
3. Ms. Jarusopha Thumkathikanon Spouse and minor children
4. Ms. Siriwan Paimsethasin Spouse and minor children
5 Ms. Jariya Sorathorn Spouse and minor children
6. Ms. Tharathip Trimankhong Spouse and minor children
7. Mr. Chaiyuth Karunyasopon Spouse and minor children
8. Mrs. Pornsook Damrongsiri Spouse and minor children
9. Mr. Vathunyu Visuthikosol Spouse and minor children
10. Mr. Anuchar Jitjaturunt Spouse and minor children
11. Mr. NatJar litchana Spouse and minor children
12. Ms. Sudapa Chamod Spouse and minor children
13. Mr. Nitat Aroontippaitoon Spouse and minor children
14. Ms. Wannee Juntamongkol Spouse and minor children
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
3,408,881-
--
5,941,677-
1,903,755-
5,121,345-
18,667,260-
1,720,524-
--
5,386,479-
8,029,573-
5,285,640-
--
3,474,869-
5,340,000-
1,238,906-
--
1,687,238-
684,566-
859,163-
6,748,956-
602,09798,000
8,967-
1,720,010-
2,791,966-
1,902,745-
25,398-
724,310-
1,669,578-
4,647,787-
--
7,628,915-
2,588,321-
5,980,508-
25,416,216-
2,322,62198,000
8,967-
7,106,489-
10,821,539-
7,188,385-
25,398-
4,199,179-
7,009,578-
0.05-
--
0.08-
0.03-
0.06-
0.27-
0.020.00
0.00-
0.07-
0.11-
0.07-
0.00-
0.04-
0.07-
Name - Surname Position
A number of Shareholding
as at 31 Dec 2013
A number of Shareholding
as at 31 Dec 2012
Holding(%)
ChangeIn 2013
Note : Minor children are persons under 20 years of age.
Remuneration for the Directors and the Executives
1. Remuneration for the Directors
1.1 Cash Remuneration Basis of remuneration for the Directors are remuneration for giving advice on any matters to working team of the Company and fees for the meeting, which the Company normally has at least the Board of Directors Meeting once a month, and the Meeting of sub-committees, i.e. Audit Committee Meeting, Executive Committee Meeting, Nomination and Remuneration Committee Meeting.
The Nomination and Remuneration Committee and the Company’s board of directors has considered to specify the remuneration for directors by relying on the Company’s overall operating results, the payment of dividends to shareholders, obligations and responsibilities of each committee. For the criteria of remuneration payment, the Company will base on the same criteria as used for the payment of the director’s remuneration of the Company which operates in the same type of business and receives approval from shareholders.
On 5 April 2012, the Shareholders Meeting of 2013 has a resolution to grant the annual remuneration not exceeding Baht 12,000,000 and pension to the directors not exceeding Baht 22,000,000. Details of remuneration payment are as follows:
• MonthlyRemuneration - Chairman Baht 80,000/ person/ month - Director Baht 40,000/ person/ month
• RemunerationforMeetingfortheBoardofDirectorsMeetingandSub-CommitteeMeetingwhichshallbepaid according to the number of meeting attendance. - Chairman Baht 30,000/ person/ time - Director Baht 20,000/ person/ time
Details of Board of Directors’ remuneration in 2012 are as follows;
1. Mr. Anant Asavabhokhin2. Mr. Pong Sarasin3. Mr. Rutt Phanijphand4. Mr. Joompol Meesook5. Mr. Apichat Natasilapa1
6. Mrs. Suwanna Buddhaprasart7. Mr. Manit Udomkunnatum8. Mr. Naporn Soonthornchitcharoen9. Mr. Khunawut Thumpomkul2
10. Mr. Apilas Osatananda11. Mr. Thaveevat Tatiyamaneekul12. Mr. Chanin Roonsamrarn
Total
1,230,000660,000720,000720,000720,000720,000720,000700,000720,000720,000700,000720,000
9,050,000
--
240,000---
300,000220,000240,000
---
1,000,000
---------
390,000260,000280,000
930,000
--
60,000-
40,000------
40,000
140,000
3,384,6151,692,3081,692,3081,692,3081,692,3081,692,3081,692,3081,692,3081,692,3081,692,3081,692,3081,692,308
22,000,000
4,614,6152,352,3082,712,3082,412,3082,452,3082,412,3082,712,3082,612,3082,652,3082,802,3082,652,3082,732,308
33,120,000
Name - SurnameMeeting Allowances
Board of Director
Executive Director
Audit Committee
Nomination and Remuneration Committee
Pension Total(Baht)
Remark : Mr. Khunawut Thumpomkul, holding the position of Director and Managing Director, received compensation as the meeting allowance and Director’s fee. However, salary and bonus were included in the remuneration of the Executive.
ANNUAL REPORT 2013050
1.2 Other Remuneration
Besides the Director remuneration as item 1 above, the Company has given other benefits to the Directors only the welfares benefit for buying goods with discount, which the given discount are as specified in the Articles of Association of the Company having been approved by the shareholders meeting, and that such welfares benefit was given by the Company at the rate not higher than the rate the Company gives to general VIP customers which is fixed at the highest rate not more than 10%.
2. Remuneration for the Executives
2.1 Cash Remuneration
The Company has criteria on the making of payment of the remuneration to the Executives by considering from knowledge, capability, experience, and performance, and by comparing with other companies in the same industry.
Remuneration of 12 Executives for the year 2012 and 2013 consisted of salary, bonus, and other remunerations for the total amount of Baht 70.9 million and Baht 81.0 million respectively.
2.2 Other Remuneration
In addition, the Executives also receive other benefit from the warrants issued to employees of the Company (ESOP), which the final exercise date was expired after May 14, 2013. In July 2013, the Company has launched Employee Joint Investment Program (EJIP) by the eligible and participanted managements and employees will receive monthly contribution for buying the Company’s stock.
Human Resources
Detail of numbers of employee during year 2011 - 2013.
On December 31, 2013, the Company had a total of 8,998 permanent employees with related personnel expenses of Baht 3,105 million.
Head OfficeBranches
Total (persons)
Number of Branches
1,5985,369
6,967
45
1,9106,238
8,148
53
1,9467,052
8,998
64
Number of Employees 31 Dec 2011 31 Dec 2012 31 Dec 2013
Remark: The number of employees in each year already includes some of employees of the branches which will be opened next year.
HOME PRODUCT CENTER PLC. 051
Corporate Governance
The Board of Directors realizes the importance of Corporate Governance and believes that the good Corporate Governance is the crucial factor for business operation, in order to efficiently and effectively manage the business to have stability, continuous growth and fairness to all stakeholders. From such reasons, the Board of Directors stipulates the Corporate Governance Policy, having content covering the important principle on the rights of shareholders, equitable treatment to shareholders, considering to the roles of interest person, disclosure of information and transparency, and responsibility of the Directors, in order to be guideline for managing business to achieve the company’s objectives and goal that have been set according to business policy sticking to correctness and transparency. The policy of Corporate Governance of the Company is disclosed at http://hmpro.listedcompany.com/
1. Rights of Shareholders
The Board of Directors of the Company realizes and pays attention to the basic rights of shareholders to ensure equivalent treatment by promoting and facilitating the exercise of shareholders’ rights such as the rights to obtain relevant and material information on the company, rights to attend shareholders’ meeting, rights to participate and vote to elect and remove members of the board, rights to approve the appointment of and remuneration for auditors as well as rights to vote in other issues of the Company. More importantly, shareholders will be entitled to express their opinions independently in shareholders’ meeting and to redeem their shares as well as to approve payment of dividend. The Board of Directors of the Company will act, in good faith with due diligence and care, in the best interest of shareholders and will not take any action that infringe shareholders' rights.
In addition to the basic rights of shareholders stipulated by law and the Company’s Articles of Association, the Company gives an opportunity to the shareholders, as owners of the Company to submit questions and opinions relates to business operation to the Company’s independent directors prior to shareholders’ meeting so as to propose to the Board of Directors for consideration.
Rights of attending shareholders’ meeting
- The Company gives rights to the shareholders to propose meeting agenda and to nominate qualified candidate for director position prior to the shareholders’ meeting. For the annual general meeting of shareholders for 2014, the Company has posted annual ordinary meeting of shareholder, the Company has posted guidelines and relevant documents on the Company’s official website since 5 November 2013. The shareholders are allowed to submit their proposal and nomination of candidate for director position to the Company by 15 January 2014 and submit their questions related to the Company by 29 March 2014.
- The Company has delivered the notice calling for the meeting with information, documentation supplement to each agenda with proxy to shareholders 7 days or 14 days (as the case may be) prior to the meeting date, or as stipulated by law of both Thai and English language, including the Company’s Articles of Association in relation to the Shareholders Meeting and casting of vote.
- In case minority and institutional shareholders are not able to attend the meeting, the shareholders can appoint an independent director through proxy Form A to vote or to cast their vote through proxy Form B and Form C. For the Annual General Shareholder Meeting in the year 2014, Mr. Chanin Roonsamrarn, Independent Director, has served as proxy.
- The Company has chosen meeting venue that can accommodate the shareholders attending the meeting in a location with convenient transportation so as to facilitate the shareholders who wish to attend the meeting. In addition, the Company also arranges receptionists to offer assistance in verifying meeting document and uses bar code system to register meeting participants in order to expedite the process. The registration begins 2 hours prior to the start of meeting.
ANNUAL REPORT 2013052
- Prior to the meeting commencement, the Board of Directors will explain to the shareholders to acknowledge the rights under the Articles of Association of the Company, the proceeding of the meeting, casting the vote, including the giving of the rights to shareholders to raise questions and express opinion equally.
- The Company allows the shareholders to witness voting counts along with legal advisors to ensure transparency.
- The Company conducts the meeting of shareholders in sequence to the agenda that had been sent to shareholders along with letter of invitation. The Company had never add any meeting agenda without giving prior notice to the shareholders as this would lead to unfair treatment of shareholders who did not attend the meeting.
- Generally, the meeting minutes will be reported to the SET within 14 days and also publicized it on website of the Company. After shareholders’ meeting, the Company will disclose the shareholders’ resolution with voting details to each agenda on the Stock Exchange of Thailand and the Company’s official website on the date of meeting or the next working day after the date of meeting.
2. Equitable Treatment of Shareholders
The Company, being aware of the importance, ensures that the every shareholder, whether executive shareholders, non-executive shareholders, and foreign shareholders should receive equitable and fair treatment.
It is the Company’s policy to prohibit and disclose the use of Company’s internal information to trade the Company’s shares. The said policy has been stipulated in the Business Ethics Manual and disclosed to employees, executives and directors. Details of the policy and internal procedures in monitoring the use of Company’s information by directors and executives for personal interest are as follows:
- Provide knowledge to the committee and the executive in each department in relation to duty that executive shall report the holding of securities of the Company and penalty under the Securities and Stock Exchange Act B.E. 2535 and under the regulations of the Stock Exchange of Thailand.
- The Company has required the committee and the executive to report the change of securities holding to the Securities and Stock Exchange Commission under Section 59 of the Securities and Stock Exchange Act B.E. 2535, and delivered copy of such report to the Company on the same day as sending to the Securities and Stock Exchange Commission.
- The Company has notified to the committee and the executive to restrain from the purchase and sale of securities of the Company 1 month before disclosing of financial statements every quarter. Or, in the event that there may be any inside information which may impact to a price of the Company’s securities to the public, all executives and directors are required to restrain from purchase and sale of securities as well. The disclosure of material information to other person is not allowed and such has been notified via e-mail every quarter.
In the year 2013, the directors and executives of the Company did not buy and sell securities by using internal information and did not violate the regulations of buying and selling securities or enter into any related transaction as per the regulation of the Securities and Exchange Commission.
The guideline as above has been approved already by the Board of Directors. However, if there is the violation of regulations mentioned above, the Company will proceed with discipline punishment as appropriate as the case may be.
HOME PRODUCT CENTER PLC. 053
3. The Role of Stakeholders
The Company has stipulated the regulations for the interest person in the “Handbook of Business Ethic” of the Company. By having an intention to carry out business faithfully, transparently and auditable, the Company stipulated the policy in connection with conflict of interest for the directors, executives and employees in order to prevent directors, executives and employees from engaging in potential conflict of interest of the Company or personal interest. And to in order to ensure that the Company will comply with in order to provide the rights to interest person under the relevant laws, whether the shareholder, staff, customer, business partner, community, society, and environment. Moreover, the Company has also strengthened cooperation with the stakeholders in each group in order to be able to ensure business sustainability with the fair benefits to all parties, in order to build the long-term success. For the detail of the Role of Stakeholders of the Company, it is reported at “Corporate Social Responsibility Report”
4. Disclosure and Transparency
The Board of Directors has given the importance to the disclosure of information which are accurate, complete, transparent, in timely manner, and equitably distributed to the investor and stakeholders to acknowledge, of both financial reports and material information that affect the value of the Company’s Securities which will be disclosed through the publication of the Stock Exchange of Thailand and website of the Company.
The Company has the Investor Relationship office to be responsible for giving information and hearing to opinion of shareholders and investor regularly, by contacting Mr. Rakpong Aroonwatdhana, Tel. 02-832-1416 or via e-mail at [email protected] Furthermore, the Company has also provided the opportunity to communicate and activities between shareholders, investors and high rank executive of the Company, apart from the Annual Shareholders Meeting as follows:
Website
Analyst Meeting
One on One meeting and Company visit
Road Show
Press Conference and Media Relationship
The Company has presented the operational result, annual report, annual transactions information 56-1 form, minutes of shareholders meeting, news about the Company, news notified to the Stock Exchange, webcast, documentations supplemented to the analyst meeting and contact channel, and also distribute information of the Company in relations to Corporate Governance, Board of Directors and Executives Chart, shareholding structure. To facilitate and provide equal opportunity in searching information, such have been prepared in both Thai and English version.
The shareholders, investors, and interested person of the Company may express opinion and propose additional agenda to the meeting and propose the person who has qualification to be the director before the Company will send a notice calling for the meeting through website.
The Company has arranged for the meeting for the analyst and investors, including shareholders who are interested in disclosing the operational result on every quarter for 4 times in 2013. The Company also provided the investor information release to investors every quarter.
All through 2013, the Company opened the opportunity to analysts, shareholders and institutional investors both domestic and international to meet with the executives of the Company, including conference calls, in order to answer the questions relating to the operations of business for the total of 146 times, welcoming group of people for their company visit of 24 times, and also joining the Opportunity Day, the event to meet investors conducted by the Stock Exchange of Thailand.
In 2013, the Company attended the conference and Road show as arranged of both domestic and international totaling 11 times as follows:1. Having met foreign investors as arranged by Financial Institution in Thailand for 4 times2. Joining the Conference and Roadshow in United States, Japan, Singapore and Hong Kong for 7 times.
The Company has made the press conference once about the annual business result in 2012 and direction to operate business in 2013. At the same time, the Company has as well prepared the Press Release for the media. Occasionally, the Company also provided the press for marketing activities and update for business progress.
ANNUAL REPORT 2013054
5. Board Responsibilities
The Board of Directors has participated in determining the Company’s visions, mission, objectives, business plan and corporate budget, which are reviewed every year.as well as ensuring that the management has operated according to the plan and budget with efficiency and effectiveness. The Chairman of the Company, President of Executive Committee, and Managing Directors of the Company are not the same person the Board of Directors have defined a clear line of roles and segregate responsibilities among the directors, and members of sub-committee. And management, in order to balance the power and create transparency for work performing.
The Company has appointed the Audit Committee who are Independent Directors to review the accuracy, sufficiency of the disclosure of information and the reliability of financial report, Corporate Governance and internal control of the Company which have details of obligations as specified in clause “Management”.In case there was transaction that was not under normal course of business of the Company, the Board of Directors of the Company has duty to consider such transaction, in which there shall be Independent Director in the meeting as well.
The Company has the Nomination and Remuneration Committee to set the procedures and rules on selecting the Director of the Company, and set the period of remuneration or other benefits which is fair and reasonable and present to the shareholders meeting for consideration.
To promote every party to perform their duty according to assigned responsibility with transparency, the Company has prepared the policy of Corporate Governance, handbook of ethic, and code of conduct on ethics of Directors, the management, and staff in order for the relevant persons to comply with the guideline in performing assignment of the Company honestly, and to follow up with the compliance of the guideline regularly, including to stipulate discipline penalty.
First orientation and briefing of the Company’s business to the new Director
The Company has policy to organize orientation to every newly appointed director in order to acknowledge the roles, duty, and responsibility, including giving knowledge, understanding of business and operating in every part of the Company, which is to prepare the readiness to perform duty of the Directors. By presenting information that will assist newly appointed directors in performing their roles such as Directors’ Handbook, Company’s Good Corporate Governance and Business Code of Conduct Handbook, Company’s Articles of Association, financial and shareholders structures, business performance, laws and best practices guidelines, training programs for directors as well as other information related to the business operation in order to create better understanding about the Company and its operation to newly appointed directors. As the Company did not appoint any new director in 2013, so the orientation program for that year was omitted.
Training Programs for the Board of Directors
The Board of Directors facilitate and promote directors to attend training courses and seminars in order to accumulate knowledge that will benefit the Company. The Board of Directors assigned the Company Secretary to collaborate and notify directors of upcoming training courses and seminars.
In 2013, a Company’s director Mr. Apichat Natasilpa had attended the training program on Role of the Compensation Committee Program (RCC) class 16/201 organized by the Thai Institute of Directors (IOD).
HOME PRODUCT CENTER PLC. 055
The Board of Directors Meeting
The Board of Directors of the Company and Executive Directors shall have regular meeting every month and may have special extra meeting as necessary. In order to conduct Board of Directors’ meeting and vote in the meeting, the Company requires a quorum of two-third of directors to participate. The schedule of Board of Director meeting and the sub-committee’s meeting for the whole year are defined in advance, and there shall be sending of the notice calling for meeting with agenda of the meeting approximately 5 working days in advance for the Directors to be prepared.
In addition, non-executive independent directors and audit committee can conduct meetings among themselves as appropriate to discuss issues related to the management of the Company without involvement of the Company executives.
In 2013, the Company had 12 times of Board of Directors Meeting and the meeting of Sub-Committee i.e. 12 times of Executive Directors meeting, 14 times of Audit Committee meeting, and 2 times of Nomination and Remuneration Committee meeting, details of attending the Board of Directors meeting and other sub-committee meetings are as follows:
1. Mr. Anant Asavabhokhin
2. Mr. Pong Sarasin
3. Mr. Rutt Phanijphand
4. Mr. Joompol Meesook
5. Mr. Apichat Natasilapa
6. Mrs. Suwanna Buddhaprasart
7. Mr. Manit Udomkunnatum
8. Mr. Naporn Soonthornchitcharoen
9. Mr. Khunawut Thumpomkul
10. Mr. Apilas Osatananda
11. Mr. Thaveevat Tatiyamaneekul
12. Mr. Chanin Roonsamrarn
9 / 12
9 / 12
12 / 12
12 / 12
12 / 12
12 / 12
12 / 12
11 / 12
12 / 12
12 / 12
11 / 12
12 / 12
12 / 12
10 / 12
11 / 12
12 / 12
13 / 14
13 / 14
14 / 14
2 / 2
2 / 2
2 / 2
Name - SurnameAttendance / Number of all meetings (times)
Board of Directors
Executive Directors
Audit Committee
Nomination and Remuneration Committee
ANNUAL REPORT 2013056
Succession plan of the High rank of Executive
The Company has prepared the succession plan to prepare in the event the executive is unable to perform his duty, by having initiatively structured the replacement of the low rank of executive in the level of branch manager up to higher level by setting up the position of Management Trainee in order to ensure that the business of the Company will be carried on efficiently.
The Internal Audit Department
In order to promote the procedures of good governance, the Company has formed an internal audit to review and followed up the result of work performing to the Management, by performing its work independently, and reporting the result of the operation to the Audit Committee directly and regularly.
Moreover, there was a proposal to appoint the auditor approved by the Audit Committee and to evaluate efficiency of internal accounting control of the Company which the resolution of the shareholders in 2013, approved to appoint the auditor from EY Office Limited (formerly known as Ernst & Young Office Limited), by Mrs. Gingkarn Atsawarangsalit, an auditor License number 4496 as the auditor of the Company and its subsidiaries for the year 2013. The auditor does not have any benefit that may cause direct or indirect conflict of interest to the Company and who is neither the debtor nor the creditor of the Company/ subsidiary/ executives/ major shareholders or anyone related to such person. The auditors of the Company and of the subsidiary are within the same audit firm.
Criteria of Performance Appraisals and remuneration policy for Managing Director
The Company has the Nomination and Remuneration Committee to propose opinion to the Board of Directors of the Company in consideration of setting the annual Key Performance Indicators (KPI) to be used in evaluation of work performance of the Managing Director, such KPI shall be in accordance with the goal of the Company for both short term and long term with an objective to create motivation and sense of participation in the ownership of the Company.
Short term : Payment of rewards in the form of salary and bonus based on the performance. Long term : Set up Employee Stock Ownership Plan(ESOP) and Employee Joint Investment Program (EJIP) per details as follows
ESOPW1,W2และW3
ESOP W4
EJIP
15 Sep. 2004 - 1 Apr. 2010
15 May 2008 - 14 May 2013
1 Jul. 2013 - 30 Jun. 2018
- Each program has a term of 3 years
- Can be exercised once every quarter
- The program has a term of 5 years
- Can be exercised at an increasing
rate of 20% per year
- The program has a term of 5 years
- The Company will contribute a
maximum of 5% on a monthly basis
Programs Implementation Timeframe Remarks
HOME PRODUCT CENTER PLC. 057
Compliance Unit
According to the notification of Capital Market Supervisory Board Re: Establishing Compliance Unit of Business Operator which is applicable to person licensed to undertake the following businesses : (1) securities brokerage, (2) securities dealing, (3) securities underwriting, (4) mutual fund management, (5) private fund management, (6) being derivatives broker, (7) being derivatives dealer and (8) being derivatives fund manager. The notification stipulated that business operator shall arrange to have compliance unit having duty to monitor business operator’s compliance with rules and shall provide support to such unit to perform duty effectively.
Since the Company’s business does not fall within the 7 types of business mentioned above, therefore, such notification is not applicable to the Company. However, the Company had established Internal Audit Unit that has the same duties and responsibilities as Compliance Unit.
Process and Criteria in assessing performance of the Board of Directors
The Company has assigned the Nomination and Remuneration Committee to develop assessment criteria to evaluate performance to the Board of Director every year in order to define the remuneration of directors. The Nomination and Remuneration Committee define the remuneration based the growth of the Company’s net profit, market capitalization of the Company and number of meeting attendance.
The objective of annual work performance evaluation is to develop the performance and efficiency of the Board of Directors and to develop evaluation criteria for the following year.
Whistleblowing Policy
The Company has assigned Human Resource and Internal Audit departments as a complaint handling center to receive complaint in relation to violation of laws or ethics and the code of business ethics. The Company’s employees, business partners, customers, shareholders and interested persons are able to report or file complaint to the Company so that appropriate investigation can be conducted.
- Communication with the Director of the Company. In case requiring for notifying or communicating in relation to operation of the Company, by such information will be sent to the Managing Director at http://hmpro-th.listedcompany.com/contact_board.html
- Communication with the Audit Committee. In case requiring for filing complaint in relation to violation of laws or ethics, accounting issues, internal controlling, etc. Such information shall be sent to the office of internal audit of the Company in order to be compiled and proposed to the Audit Committee for further consideration at http://hmpro-th.listedcompany.com/contact_audit.html
- Complaints Notification Unit, Human Resources Department. In case requiring for staff to make complaints or notify any offending acts at [email protected]
The identity of the whistleblower will remain anonymous from the Managing Director and Deputy Managing Direct of the related business unit only. There was no such complaint is received so far.
Governance on subsidiaries
Until present, HMPRO’s Board of Directors appoints the Company’s executives to be directors of the subsidiaries. The directors’ responsibilities are to ensure the maximum benefits of such subsidiaries, to supervise the subsidiaries to comply the rules regarding related party transactions, asset acquisition and disposition, and other major transactions, to ensure that such subsidiaries apply the same disclosure policy and practices to the aforementioned transactions as the Company, and to supervise such subsidiaries to appropriately retain information and record accounting transactions in order to facilitate the Company in the reviewing and gathering of subsidiaries’ financial statements to be consolidated with the financial statements of the group in an appropriate timeframe.
ANNUAL REPORT 2013058
This report has been written with an objective to illustrate corporate social responsibility programs of Home Product Center Plc. covering economics, social, and environmental aspects. This is the national approach towards social responsibilities of a corporate that embraces all key areas of universal principles including Good Corporate Governance Principle of Stock Exchange of Thailand (SET) and Corporate Social Responsibility Guidelines of Securities and Exchange Commission (SEC). The report is an annual update of the Company as of December 31, 2013.
Scope of this report covers overall policies, procedures, and activities relating to economy, society as well as environment on a sustainable basis for Home Product Center Plc. The Company set up CSR working team committing to strengthen linkages between the business goal and corporate impact on economy, society, and environment. The team also monitors and evaluates the outcome in order to efficiently plan and operate as well as communicate with all stakeholders.
As this CSR report is being compiled for the first time, there will be no comparative information in a significant change of data.
In order to strengthen linkages between business operation and social responsibility context, the Company categorized a group of people or an individual that gets affected by or has an impact on business operation or activities related to the organization into “inside-organization stakeholders” i.e. employers, management, staff and “outside-organization stakeholders” i.e. customers, vendors, government organizations, account payables, and shareholders. Roles and responsibilities of each individual are set up to emphasize a clear linkage of business operation.
Stakeholders and Business Linkage
1. Management • Managebasedongoodcorporate governance principles • Developorganizationintermofgrowthand stability • HaveVisionary
1. Customer • Sellstandardizedgoodsunderpublicized • Donottakeadvantageofcustomersand service all customers fairly • Standardprice • Supportservicesbothpreandpostsales • Listenandrespondtoallfeedbacksand complaints
3. Shareholder • Managewithgoodcorporategovernance principles • AddvaluetotheCompany • Giveappropriatereturnsonaninvestment
5. Government• Supportandcomplytoalllawsandregulations • Cooperatewithgovernmentagenciesonactivitiesandcampaigns
4. Accounts Payable • Stricttorepaymentscheduleandrequiredconditions • Maintaindebttoequityrationottoexceedrequirementson bond issuance
2. Staff • Constantlyandgrowthopportunityincareerpath • Fairandcompetitiveremunerationincomparisonwithlabor market • Favorableworking-environmentandsafe • Trainingandcoachinginareasrelatedtoworkresponsibilityto add value to staff and organization
2. Vendor • Complywithtradingrulesandconditionsincludingrespect human rights • Opentocompetition,liberalandfairtradeledbyauction process • Emphasizeonproductionstandard • Operatewithintegrity • Focusonenvironmentalmanagement
Outside-organization Stakeholders
2013 Corporate Social Responsibility Report
Inside-organization Stakeholders
HOME PRODUCT CENTER PLC. 059
CSR Working Team
Presently, “Corporate Social Responsibility” is being emphasized as one of the important agendas as well as business operation. In this regard, Securities and Exchange Commission (SEC) requires that all listed companies disclose information showing awareness on social and environmental impact and relevant parties on the Annual Registration Statement (Form 56-1) and Annual Report. Hence, to be able to efficiently and transparently disclose business procedures in relation to social responsibility, the Company set up a working group of people as follows:
1. Mr. Nat Jarlitchana Senior Vice President - Marketing 2. Mr. Weerapun Ungsumalee Senior Vice President - Operation 3. Mr. Vathunyu Visuthikosol Senior Vice President - Business Development 4. Ms. Siriwan Paimsethasin Senior Vice President - Merchandising 5. Mr. Nitat Aroontippaitoon Senior Vice President - Human Resource and Loss Prevention 6. Ms. Wannee Juntamongkol Senior Vice President - Accounting and Finance 7. Ms. Orapin Sirijitgasame Vice President - CRM Marketing Management 8. Mr. Sansern Ruengson Vice President - Human Resource
Business Context
In accordance with the vision to be the leader of home center business in Thailand and South East Asia, the mission therefore commits to provide trust and confidence in terms of standard in goods, services, and prices by utilizing environmentally-friendly raw materials as guaranteed by global standards namely Thai Industrials Standards (TIS), Consumer Protection Board Standards (OCPB), Food and Drug Administration (FDA), Hazardous materials used in public health, Goods labeled number 5, and International Electro technical Commission (IEC). The Company commits to service all customers with consistent and fairness based upon good corporate governance. It also thrives to collaborate with business alliance to improve efficiency as well as build good relationship with society and community to create mutual benefits. In addition, the Company always seeks for a new business opportunity including new goods, new branches for an incremental value for the Company and all stakeholders, at the same time, develop personnel’s competency, efficiency commitment, and continually maintain Homepro’s products awareness as the number one.
To develop business sustainability and generate benefits to society, it is not only about providing goods and services that satisfy customers’ need or running a business by not generating negative impacts on all related parties economy, society and environment wise, but it is absolutely also about social responsibility in all levels, inside and outside organization. As a result, the Company has attempted to connect business operation to the context of economy, society, and environment.
ANNUAL REPORT 2013060
HomePro Corporate Social Responsibility in Accordance with the Principles of the Stock Exchange of Thailand
1. Operating Business with Fairness
The Company believes that running a business with fairness creates the confidence to stakeholders which will be beneficial to the business in long term. Hence, the Company operates business based on accuracy, fairness, non-exploitation, integrity, reliability, mutual benefits with vendors and account payables. The codes of conduct can be achieved by strictly complying with rules of law, having business ethics, not bribing or cheating with vendors, applying good corporate governance, being direct with business transaction or corresponding with government agencies, opposing to bribery with government officials that leads to business convenience or business interest.
To enable sustainable business operation, the Company coded practice guidelines for all departments along the supply chain for example, vendors, outsourcing companies, contractors, suppliers in accordance with rules and regulations, trade laws. These guidelines will encourage all related companies in the supply chain of Home Product Center Plc. to work with ethics, respect human rights, emphasize on occupational health and safety of employees, and pay attention to environmental management.
Sustainability Dimensions
Environment- Provide goods under the global
standard- Handle consumables and wastes
- Save energy- Design buildings in line with local
architecture and create environmental awareness
Social - Economic- Responsibility to stakeholders i.e.
customers, vendors, competitors, and shareholders
- Offer scholarship for diploma students- Host a competition “HomePro’s Best
Technician”
Social- Environment- “Fun walk activity”: staff to use stairs instead of elevator- Kids toilet project”
Environment- Economic- Rent out a space to install solar roof equipments- Sell Green goods to the market
Corporate SustainabilitySocial
- Operate with fairness- Oppose to corruption and fraud
- Respect human rights- Initiate blood-donation activity
Economic- Expand existing business
- Seek for new business opportunity- Develop standard and quality
of goods and services- Reduce cost
HOME PRODUCT CENTER PLC. 061
The Company has a policy to disclose consistent and accurate information in order that all stakeholders can access to all key data. All significant information, connected transactions, off-balance sheet information are disclosed via Annual Report which is annually delivered to shareholders together with an invitation letter for the Annual General Meeting of shareholders and annual registration statement (form 56-1). The information can also be found at the Company website or SET website as well as SEC website.
Commitment with Vendors
The Company has a policy to treat all vendors with fairness, maintain confidentiality, not exploit or take advantage of others by taking a position of market leader. The company commits to accuracy, transparency, fairness, and accountability in managing and conducting transactions with vendors. In this regard, to enable business sustainability, the Company lays a foundation to vendors via sustainable practice guidelines where content and scope are in line with relevant regulatory laws and regulations. This shall enable vendors to operate business with ethics, respect human rights, and pay attention to employees’ occupational health and safety as well as environmental management.
The Company emphasis on a relationship with vendors as business partners that will grow together including support and offer an opportunity to vendors’ business or small and medium enterprises with fairness aim towards mutual benefits. The Company has a measure to loosen cost burden of vendors or small and medium companies. Such measure is believed to help those vendors in many areas as follows:
Procurement: The Company offers vendors an opportunity to introduce their goods without price pressure. Selection process is conducted together with vendor evaluation in 4 aspects: Production capacity, Product quality, Quality of service, and Quality of logistics. The Company also takes pride in its professional planning for purchase order/ manufacturing order 3 months in advance so that vendors can manage planning, as a result, generating mutual benefits.
Production: The Company has experts to design and develop goods for vendors and entrepreneurs for efficient improvement in an environmentally friendly manner and for target customer satisfaction. This will add incremental value to the goods.
Sales: In 2013, the Company has 64 branches all over the country and that means an increase in distribution channel for vendors from existing branches and cost saving for vendors for logistics including better quality of service to customers. In addition, the Company develops knowledge and competency of each vendor representative e.g. product consultant.
Service: The Company has distribution center to distribute goods to customers all over the country to save vendor’s costs on transportation and distribution as well as fast, convenient and up-to-date with vendor relationship management system (VRM) to support all aspects of information, treat vendors like partners where vendors are able to receive a similar information as the Company i.e. financial data, once goods are delivered, vendors are able to check payment status online and do not need to send an officer to hand an invoice or receive money. VRM system is operated online and automatic towards money transfer process to vendors.
The Company respects vendors’ rights in receiving necessary information to evaluating the Company equally. Consequently, it will continue to regularly disclose information on performance, financial data, and all supporting information as required by the Stock Exchange of Thailand. The Company also maintains good, sustainable, and consistent relationship with vendors including not abuse vendors’ information. More importantly, the Company provides a channel for vendors in case they are treated without fairness and so the Company will bring back those complaints and feedback to improve and develop on a sustainable basis.
ANNUAL REPORT 2013062
“Contractors Development for Sustainable Growth”
The Company supports vendors, outsource companies, contractors in need of financial support or basic facilities to start up a business by launching “Tao Kae Noi” (small entrepreneur) project. The Company distributes work on logistics, home service to contractors. Technicians participating in this project will get a training course on policy and work procedures to ensure customers gain the same standard of operation.
In addition, the Company is aware of the importance of supply chain development for not only upgrading the service standard of the Company staff but also improving personnel in related units particularly home service. In this regard, the Company hosts a competition “HomePro’s Best Technician” with an aim to enhance proficiency of Home Service technicians towards universal standard. In addition, the professional technicians will provide the best service to their customers and this is the customers’ first impression.
To enhance technicians’ proficiency, in 2013, the Company hosted the competition for 3 consecutive years in collaboration with the Department of Labor Skill Development under the Ministry of Labor, Cera C-Cure Company Limited, SS Glascera Company Limited, Navapas Product Partnership, Ruby Thailand Company Limited. The competition took place at Institute for Skill Development, Samutprakarn and was divided into three areas including tiling technicians, air conditioner installation technicians, and washing machine cleaning technicians.
Numbers of technicians participating in this competition are as follows:
Winning technicians received a reward more than 200,000 Baht and a certificate. In addition, the Company guaranteed full year job assignment and technicians performance became a standard for Home Service as the post-competition yielded a competitive environment such that technicians competed with one another on their performance and number of assigned work from the Company as well as remuneration. These competitive atmosphere rendered higher quality and service for customers as evidenced by a continuously growing index on customer satisfaction survey in 2011-2013.
Number of Technician (person)
Number of Team (team)
80
40
120
60
120
60
2011 2012 2013
HOME PRODUCT CENTER PLC. 063
Commitment with Customers
The Company was established with an objective to operate a retail business by providing complete range of goods and services relating to construction, addition, decoration, and renovation of buildings, houses, and residences in a form of One Stop Shopping Home Center. In addition, since most of the Company’s goods are filled with details and processes that need to convey to customers, the Company therefore provides all related services starting from offering consults and key information for further consideration where customers make the right decision and choice. Home Service also offers 3D system design, installation service, maintenance service, and home improvement service. Professional technicians are available for service after sales including exchange and return service, Do It Yourself and workshop activities that are useful to customers’ places.
The Company’s goods have been selected and crafted according to quality inspection process and legal requirements. The Company is against infringement of intellectual property or any goods with a copyright and patent. All goods and products shall be safe to customers and friendly to the environment as guaranteed by Thai Industrials Standards (TIS), Consumer Protection Board Standards (OCPB), Food and Drug Administration (FDA), Hazardous materials used in public health, Goods labeled number 5, and International Electro technical Commission (IEC). However, if customers find any defect or problem with the product they can exchange or return such product to the Company within 14 days.
The Company commits to select quality goods and services to serve and satisfy customers’ need by offering high quality products and avoiding price cutting to gain margin because it is a path towards cost reduction, poor quality and shortens usage where customers have to buy an item more often and this equals to increasing wastes to the world.
In addition, the Company adds a channel for customers’ recommendation and feedback on goods and services including HomePro staff service or any problem customers may have at:
- Company website: www.homepro.co.th or - Call Center +66 (0) 2831 6000 or - Suggestion Form at any HomePro branch - Customer Service Center Home Product Center Plc. 96/27 Moo 9 Tambon Bangkhen, Amphoe Muang, Nonthaburi 11000
Responsibilities to Competitors
The Company professionally treats competitors in accordance with global principles under a set of laws including trade competition act, no breach of confidentiality or any advance knowledge of the trade secret of partners by means of fraud, no breach of confidential information of competitors by methods not in good faith, and no discrediting the reputation of competitors by a malicious accusation.
ANNUAL REPORT 2013064
2. Opposition to Corruption
Ethics, Integrity, and Transparency are one of the Company’s core values where it has a policy on business transparency, anti-corruption in the organization. Organization structure is created in term of good corporate governance with compliance and internal audit. Employees are encouraged to have a good mindset. Management team leads with transparency and distribute ethics guidebook to all employees for future practice and belief. The Company also has corporate culture of building a smart and decent employee, for instance, rewarding and praising in a campaign “Kon Dee HomePro” (HomePro’s Decent Staff).
The Company encourages all employees to take part in monitoring compliance with good corporate governance principles where staff can make a complaint at any behavior they see inappropriate or misbehaved. Complaints can be done by several channels, for instance, email address to Managing Director at [email protected] or via HRMS internal system or website www.homepro.co.th. Reply process is fast and fair as HR and top management will listen to all complaints in a fair and transparent manner. They pay attention to transparency and accountability in all transactions or contracts or relevant companies in order to avoid any inappropriate or conflicting manner or behavior against good corporate governance including an opposition to bribery that could misconduct business transactions.
Branch Expansion
In 2013, the Company has 64 branches all over the country and is planning to continuously expand more branches for building construction based upon transparency. Details are as follows: 1. Architectures and designers are hired for interior design, system of which those professionals will identify specifications, raw materials. Suppliers will present to the Company together with the designers for mutual consideration and approval prior to next procedure. 2. Company selects contractors considering from quality past performance by bidding or negotiating at least twice. Committees are set up to fairly and transparently select contractors and equipments. In addition, as the Company expands more branches continuously, so once contractors are approved, same quotation will be used as the reference to bid for construction a new store. 3. Inspection process is done by engineers who examine all equipments and construction procedures in accordance with the design. 4. When the construction completes, the Company will evaluate and score contractors for future bidding and collaboration.
Exchange of Gifts
1. Management and employees are not allowed to take or receive any extra benefit from vendors, contractors, suppliers, consultants, and related companies. 2. Management and employees must avoid giving or taking gifts from vendors or related companies except festive season but within reasonable value and irrelevant to business engagement. 3. Management and employees must avoid hosting or accepting entertaining in an inappropriate or exceeding manner from persons or companies related to the Company. 4. Management and employees must avoid giving or taking travel reward from vendors except a business trip that generates mutual benefits and getting approved by reward committee.
HOME PRODUCT CENTER PLC. 065
The Company set up core values on ethics, integrity, and transparency for temporary personnel as follows: 1. Training and developing. The Company provides training on business ethics in orientation course, operational standard and mind training in young Buddhist course. 2. “Kon Dee HomePro” (HomePro’s Decent Staff) activity to praise and appreciate a smart and decent personnel. 3. Regular examination of behavior and competency by Compliance, Audit, and Loss Prevention departments in order to prevent potential corruption in every function. 4. Evaluation process that indicates ethical and moral personality and mindset using annual performance management.
As for vendors or subcontractors, the Company encourages liberal and free trade and fair bidding process, avoids corruption and fraud as well as infringement of intellectual property. In addition, the Company set up a campaign encouraging management and employees related to procurement to be aware of anti fraud and corruption or bribery in any case.
In 2013, there are no complaints against corporate governance and business ethics and no significant issue on unfair treatment, corruption, confiscation resulted from inappropriate or wrongful acts that ruin business operation and ethics.
3. Human Rights
The Company is aware of and respects human rights by giving fair treatment to customers, employees, temporary staff, vendors, and all stakeholders without discrimination on gender, religion, skin color, racist, domicile, and disability. It accepts the difference in thoughts, society, environment, norms, tradition, and culture among different locals the Company opens a new store.
The Company respects human rights on labor welfare without child labor. Work hours are according to Labor Law including suitable over time request and holidays. The Company legally employs migrating labor and supports gender equality. There is no requirement on management gender but the Company led by Board of Directors will take into consideration performance, experience. This principle also applies to the Company’s affiliates.
Employment of Disabled Personnel
The Company employs disabled personnel according to Employment Law for persons with disabilities year 2012 and supports handicapped people to fill in the same position as normal employees in a suitable and doable position, for example, sales team, maintenance team, call center, delivery, and administration.
ANNUAL REPORT 2013066
Protection of Pregnant Employees
The Company protects pregnant employees by granting maternity leave by law. Sales person is arranged to be at day shift and not allowed to work over time or during weekends or work that requires long hours of standing or heavy lifting. In addition, the Company provides maternity dress and gifts for new born baby.
Protection of Customer Information
The Company pays attention to customer confidentiality. All information related to customers is kept in a database. Access, add, or edit to the database are required by level of authorization. Request for information or editing or privileges by membership cards are also required the owner’s identification card to examine prior to proceeding.
Fair Service and Treatment
The Company targets to treat all customers with clear fairness, at the same time, convey the message to all levels of employees for the best implementation under the idea “Service Excellence”. Practice guideline follows the same standard for all branches. All customers are treated with fairness and equality, without discrimination on level of income, gender, age. Queuing system is implemented, drinking water is served to all customers, and wheelchairs are available for disabled customers.
Problem Solving on Complaints
The Company follows up and is aware of problem solving or complaints that affect employees through employee satisfaction survey, HomePro Space activity, relationship building activities. These activities are held with an objective to bring back opinions, suggestions, and complaints of employees to improve i.e. rules and regulations, workplace environment, facilities where the Company finds useful to employees and the organization. This also includes remuneration structure, employment structure, and service image. In this regard, the Company regularly communicates with all employees on welfare and package improvement via distributed information by HomePro News and distributes to employees via email as well as announcement in the workplace.
Human Rights Support at Home Product Center
The Company supports government policy, complies with laws and regulations on human rights. This becomes a fundamental for human resource management, improvement and monitoring for transparency result. HR personnel have comprehensive understanding on key requirements on human rights, on labor law and are able to apply to work as policy makers on work procedures related to human rights and labor rights. HR personnel are able to touch down to subordinates in each branch and create better understanding on all levels of staff on the subject matter.
Number of Company’s disabled personnel during 2011- 2013
Number of disabled personnel
All employees as of Oct 1*
70
6,914
83
7,974
91
9,051
2011 2012 2013
Note: Reported number of disabled personnel is required by Office of Social Development and Human Security
HOME PRODUCT CENTER PLC. 067
4. Fair Treatment to Workforce
The Company treats all workers with fairness based upon labor law and business circumstance. Staff receive fair remuneration and suitable for their responsibilities. They are paid higher than minimum wages and receive provident fund. There is neither labor abuse nor child abuse nor unfair employment contract nor labor union. Welfares are higher than those required by law and competitive among similar companies in the industry, for example, annual health checkup, medical expense, accident insurance, office uniform, emergency money, diploma- bachelor- master scholarships. In addition, the Company offers “Foundation of Retail Business in Dual Vocational Training” where it offers not only diploma scholarships but also career at HomePro. Moreover, activities on happy workplace are held, for instance, sports day competition, activity for staff who works at Company for 10 years, HomePro volunteer on CSR activities, and blood donation.
Staff Recruitment
The Company has workforce plan to recruit competent staff that is able to catch up with business demand. It opens for opportunity and fairness without discrimination on gender, racist, religion so as to put the right man on the right job and able to respond to customers’ different demands in different provinces including “Suk Jai Klai Baan” project that gives employees an opportunity to relocate to work at store near their hometown to enhance growth and prosperity.
Moreover, recruitment and selection process consists of various means so that smart and decent personnel are effectively screened. Methods are for instance: 1. Personality Test- to evaluate appropriate personality that is suitable for a position. Vice president positions and higher are required to do Supervisory Test to evaluate ability to supervise. 2. Competency- based interview- this method is conducted by interview committee to ensure an applicant is suit to the Company’ demand 3. Management Trainee- to recruit potential young executives
Performance Evaluation and Annual Bonus
The Company has a consistent evaluation system on a bi-annual basis by submitting evaluation form to supervisor. The result of evaluation is divided into department evaluation and self-evaluation that result in annual bonus for the employees. Each evaluation shall be sent to organization development department to assess for job promotion, talented personnel, and potential successor for the future.
ANNUAL REPORT 2013068
Competency Development
The Company emphasizes on consistent enhancement of staff competency for all levels to support business growth and encourage management and staff’s utmost capability.
The Company set up a particular training center for employees to learn and build work efficiency as well as follow up on training outcome for a practical result. Training coach is specifically set up to concentrate particularly on the training course of which training and competency development into 3 areas as follows:
1. Training on basic knowledge and job responsibilities for all new staff based upon 90 courses of fundamental training and job description. 2. Training and competency-based development including in-depth competency enhancement and readiness course for oversea business expansion i.e. English training course and another 11 courses of competency-based development. 3. Development of talented personnel and potential successor with 3 courses of building leadership and competency, creativity, and strategy management. In addition, the Company coorporates with leading institutions and universities to initiate Mini MBA program with an aim to train potential management of future job promotion or rotation.
In addition to in-house training programs, the training center also supports various kinds of learning as follows: - Build a culture of coaching and mentoring in the organization through on-the-job training (OJT) at real workplace. Each branch management is able to share and exchange knowledge, experience, best practice, and other useful information with newcomers. - Encourage e-learning that offers unlimited learning through Knowledge Management (KM) system. The Company currently has 30 courses of e-learning. - Encourage senior level of management and above to become a lecturer/ speaker that will render self-development as well as others. In addition, that management is able to transform their tacit knowledge into explicit knowledge in a form of teaching materials or journals distributing in the organization.
As for monitoring and evaluation process, the Company established 3 levels of monitoring and evaluation system as follows: 1. Efficiency- gauged by training schedule and target, training satisfactory survey, and speakers’ capability. 2. Productivity- measured by level of knowledge and skill, change of behavior by knowledge survey check conducted by the training center of each branch at least on a yearly basis. 3. Business Impact- evaluated by sales growth and customer satisfaction where the Company starts monitoring and evaluating such growth and satisfaction after the training.
HOME PRODUCT CENTER PLC. 069
Training and Competency Development of Staff
Investment on training and development (MB)
Training Record
Classroom (person)
e-Learning (person)*some branches
OJT (person)*only at new branches
Classroom (hour)
e-Learning (hour) * some branches
OJT (hour) * only at new branches
Number of average training hours per person
Top management
Middle management
Beginning management
Operational staff
Number of average training hours per person per year
Knowledge skill of branch staff
6.53
20,736
2,981
834
184,536
16,240
140,112
21.24
33.27
46.45
66.45
41.85
94.9%
7.79
24,987
3,502
1,137
221,364
18,664
206,934
60.24
66.21
134.96
77.41
84.71
95.7%
5.57
26,736
4,909
1,178
217,120
16,411
354,578
55.57
51.56
91.01
103.92
75.52
96.2%
2011 2012 2013
* updated on a yearly basis at December 31 * OJT (On-the-job Training) is training at each real workplace by supervisors
Career Management
Career path management is an effective instrument to thoroughly and systematically develop human resources. Evaluation of major job effectiveness for key positions driving the business is conducted, for example, operation, procurement, inventory management.
Management of talented human resources is conducted by taking into account knowledge, capability, and other elements in various dimensions i.e. business understanding and performance, ability and proficiency, experience and years of work, individual character. This management system enables workforce to have a clear direction to develop and enhance future growth of the Company, and renders staff incentives to develop themselves to meet higher target and become committed to the organization.
Moreover, the Company offers scholarships in bachelor and master degrees including Mini MBA program for talented personnel whose qualification is clearly in line with HR development target as well as the Company’s direction and strategy.
ANNUAL REPORT 2013070
Workplace Environment
Work process based on safety and occupational health of employees at their workplace is utmost important. As a result, the Company pays particular attention to setting up an appropriate workplace environment by selecting only nontoxic equipments, non chemical residues equipments to prevent pollution and chemicals during operation. Safety equipments without health hazard in short and long term are provided e.g. “back support belts” for staff lifting tiles or heavy items, “ventilation fans” for back stock areas.
In addition, the Company has work safety policy by appointing a particular department in charge of safety. Responsibilities involve arranging trainings and understanding for staff, monitoring and giving advice on safety at workplace, assessing equipment risks as well as organizing campaigns and activities relating to safety environment of workplace followed by monitoring and result evaluation. Injury record of the previous year is as follows:
In 2013, the Company renovated workplace as follows: 1. Renovated branches at Khonkan, Udonthani, Phitsanulok, and Prachacheun. 2. Renovated and expanded head office space by building a new office building and renovating the existing building by taking the first priority on hygiene, safety, convenience so that staffs have creativity and happiness at their workplace.
The Company has channels for staff to make complaints or notify any offending acts through “Complaints Notification Unit, Human Resources Department” or via email address: [email protected].
5. Commitment to Consumers
All goods at the Company are designed for household usage with a standard and environmentally friendly manufacturing process, resulting in high quality and duration. In addition, the Company offers a standard customer service for post and pre sales under Service Excellence concept for all valuable customers. Details are as follows:
Pre- sales Service - Provides professional and reliable recommendation and service to ensure that customers receive goods and service that match their demand with full privileges.
- Offers 3D design for customers who would like to renovate bath room, toilet, or kitchen or those who wish to change the tiles. Professional designers will introduce the design that matches customers’ need as well as practical use to make sure the customers see a clear picture before making the decision to purchase. If the customers need technicians, the Company is ready to provide professional technicians to a site and monitor the designed job according to the agreed timeline.
Number of accident
Number of employee
Injury rate per employee
28
6,967
0.40%
15
8,148
0.18%
14
8,998
0.16%
2011Record of injuries related to work 2012 2013
HOME PRODUCT CENTER PLC. 071
Post- sales Service - Services customers according to the Company’s conditions the transportation and installation of electrical appliances, kitchen equipment e.g. basins, and other items i.e. lamps, curtains, wallpapers. Customers can make an appointment with the staff on the purchasing day. These services are available at all branches in Thailand where customers can purchase or put orders from any branches whereby transportation and installation will be arranged at the nearest and most convenient branches to customers’ delivery request.
- “Home Service” is a post- sales service that covers 3 key parts including: Installation Service - available for installing, moving, solving problems covering electrical, plumbing, tiling including installation of bathroom and kitchen equipments. Maintenance Service - cleaning service and electrical appliances checkup i.e. air- conditioners, washing machine, clothes dryer machine, water purifier, cooker hood, and refrigerators. Home Improvement Service - Fixing and decorating service according to customers’ request i.e. tiling, bathroom and kitchen renovation, interior and exterior painting.
In addition, customers will receive service from professional and knowledgeable technicians on specific job including related products where budget and timeline can be controlled.
- Fix service - the Company will coordinate and deliver products to suppliers and follow up until the work is finished for customers’ utmost convenience. - Change or return service - customers can change or return the purchased goods to any branch within 14 days under the indicated condition. - Workshop activity - teaching on a basic knowledge of housekeeping to customers. In 2013, the Company has arranged two courses for painting and Chinese Feng Shui course. - Complaints, suggestion, and other notification - the Company has channels for complaints, inquiries, and suggestions for further improvement via call center service at +66 (0) 2831 6000 , Company’s website, or filling up recommendation form at a branch. Staff at the branch will record it to the database immediately after being notified by customers before passing on to a relevant department for further improvement under a service level agreement. The Company will keep the customers updated of latest status to ensure that customers’ notification is being taken care of.
6. Environmental Management
Since the Company’s goods are significantly correlated with environment, the Company pays close attention and commits to environmental management as follows:
Electric Energy Saving Branch: (1) Change of general lighting from high bay metal halide 400 watt to fluorescent 28 watt or induction lamp 200 watt. This helps save electricity expense more than 100,000 baht/branch/month. Changing Halogen and Par 120 to LED types is also saving energy cost for 16,000 baht/branch/month. (2) Installation of thermal insulation and using specific building walls to save cost on air-conditioning (3) Installation of transparent roof for warehouse and inventory buildings and so lights are not necessarily turned on during the day. (4) Installation of VSD for motor controlling of pump chilled water and so mechanics rely on consistent power without power surge. This also saves electricity cost for 25,000 baht/branch/month.
ANNUAL REPORT 2013072
(5) Implementation of automatic lights and installation of sensor system to automatically switch on/off when enough light is needed. (6) Maintenance of mechanical systems i.e. chiller, AHU, cooling tower on a regular basis to maintain mechanics efficiency and save energy to reduce highest electricity bill during on peak period. (7) Improvement of water condition in water cool chiller in condenser without using chemicals. This treatment prevents scale in a condenser and enables effective ventilation and saves electricity cost and other related cost for 15,000 baht/branch/month (Only the branches that ventilate with Cooling Tower).
Head Office: (1) Campaign on energy saving among all staff i.e. “HomePro Fun Walk” activity encouraging staff to use stairs instead of elevator which is also another means of exercising, “Switch off when finished” activity encouraging staff to switch off computer screen during lunch break or when not using it for a short/long while. (2) Change of on-off switch system from centralization to an individual control where each staff is required to be responsible for their own switch during breaks and off- work hours. (3) Temperature control in office building at minimum of 24 degree celsius.
Water saving Policy
The Company is aware of water usage efficiency without impact on the Company’s service. Maintenance team regularly check up water pipelines and water gauge, as well as change or fix broken or leakage pipelines, use water-saving toilets, faucets, and showers. Faucets in office are all sensor based or in an appropriate time setup.
Building Design against Surrounding Area
Architectures at HomePro are not only aware of designs according to Building Control Law and Environmental Law i.e. setback, space covering buildings, water retardant area, waste water treatment but the Company also generates an incremental value on design work. Construction at all sites takes into account environmental and culture aspects as first priority i.e. designs at Kao Yai and Saraburi branch are barn-alike, whereas roof and building at Phuket branch are ship-designed, and as for Chiangrai branch, the roof is designed with Lanna style gables.
Treatment of Supplies and Wastes
(1) Waste water - wastewater pond is built and the treated water goes to plants before draining the remaining to public tubes. (2) Recycled wastes - the Company calls for bid/tender on recycled wastes including papers, plastics, and glasses with vendors every one year or six months depending upon wastes price cycle. (3) Wet wastes - a room for wet garbage and wastes is built with air-conditioned temperature control to slow down bacteria growth and smell. Municipal agency will collect on a daily basis.
HOME PRODUCT CENTER PLC. 073
Business Opportunity to be ready for Climate Change
Energy crisis issue has been accelerated and severe whether it be lack of energy source or impact of energy consumption on the environment. In this regard, all parties need to be aware of such crisis and one of the solutions is alternative energy.
Solar roof is a solar power system which is a clean energy. Equipments are installed on a rooftop of houses, office buildings, factories, or other operational sites aiming at producing and supplying commercial scale electricity to the electricity generation authority.
The Company is in a contract agreement with Thai Solar Energy Company in December 2013 to install solar cell and further set up solar power equipments. This project is commenced with the first 10 branches namely Rajpreuk, Ekamai- Ramindra, Lopburi, Prae, Nakonsawan, Ubonraj-thani, Kaoyai, Nakornsridhammaraj, Surajthani. This project is initiated under the vision that the Company is aware of climate change impact which is also in line with the government’s policy to promote and support alternative energy, reducing the nation’s burden of fuel and energy dependence from other countries.
7. Development of Community and Society
The Company is aware of the importance of community, society, and environment development in the areas that Company has branches where the Company pays attention to pre, between, and post construction. This is because the community or society the Company enters into is all significant provinces, tourism destinations, and business districts of the nation during which the construction may negatively affect the community and their way of living.
Prior to the construction of a new branch, the Company has environmental impact assessment and requirement for contractors so as to not make any damage to the community. Project manager is assigned from a head- quarter to inspect and monitor contractors performance on a regularly basis. Business development team will study consumer behavior, income household, and consumer demand of goods and service prior to the new store construction to ensure that supply selection can be of great service to customers, for example, items suitable for elderly customers or healthy goods.
The Company assessed operation risks that may negatively affect the community i.e local stores of construction materials of which most have no fully integrated design and sales plan of home and decoration like HomePro in addition to our private brand so that customers have various choices. There is no such thing as a price competition or destruction of local stores.
At each opening of a new store, the Company builds toilets for a school nearby the branch called “Kids’ Toilet Project”. Many schools across Thailand have neither standard toilet nor good hygienic condition. As a way to give back to the society, HomePro and its business partners, in cooperation with the Department of Health, the Ministry of Public Health and Office of the Basic Education Commission, the Ministry of Education have examined and improved the school toilettes in order to enhance their standard to meet the national public toilet standard which consists of Health, Accessibility, and Safety (HAS). In addition, the project will implant hygienic behavior, sufficiency, and safety for students’ mindset so they have the same practice at home.
The Company plays a role in employing local workers for a new branch opening in several provinces nationwide. Another project is called “Suk Jai Krai Baan” (happy at hometown) which the staff can require to relocate to work at their hometown branch and make the family proud of them. This project also aims at strengthening love and affection in families and community, and generating income to locals. At present, staffs participating in this project is as high as 1,000 persons.
Moreover, the Company host activities relating to building a culture of decent men by inviting communities nearby the branch to do good deeds i.e. blood donation, merit making on religious festivals like Songkran (Traditional Thai New Year), accident rescue like flood as well as establishing high quality of life to the community such as books donation, hosting lunch for kids in the community.
ANNUAL REPORT 2013074
Corporate Social Responsibility: CSR
“Kids’ Toilet Project”
At present several elementary schools in Thailand are short of standard and hygienic restrooms where users lack knowledge on proper use of toilets. Objective is to enhance quality of life and hygiene in using restrooms among students. The Company organized a CSR activity called “Kids’ Toilet Project” in cooperation with the Department of Health, the Ministry of Public Health and Office of the Basic Education Commission, the Ministry of Education, and business partners namely Siam Sanitary Ware Industry, a manufacturer and distributor of Cotto, Thai Ceramic Company Limited, a manufacturer and distributor of ceramic Cotto, Bangkok Decorplast Company Limited, and Nippon Paint (Thailand) Company Limited have examined and improved the school toilettes in order to enhance their standard to meet the national public toilet standard which consists of Health, Accessibility, and Safety (HAS).
Enhancement of School Toilets to Meet HAS Standard of Public Toilets under “Kids’ Toilet Project”
The partnerships network with government agencies including the Department of Health, the Ministry of Public Health and Office of the Basic Education Commission and public sectors including HomePro to enhance school toilets to meet HAS standard on behalf of Office of the Basic Education Commission through “Kids’ Toilet Project”.
Standard Requirement of Thai Public Toilets consists of:
1. Heath - toilets are properly cleaned as required 2. Accessibility - toilets must be available and sufficient for users including disabled users or disadvantaged ones 3. Safety - public toilets must be located in a safe area i.e. toilet location must not be too remote, male and female toilets are separated, and enough light is provided.
Objective
1. To improve elementary students’ quality of life for those who got selected to be part of the project. 2. To promote and imprint hygienic toilets usage for elementary school students in the project. 3. To embrace a sense of public belonging for elementary school students in the project.
Project Goal
1. Renovate and/ or build standard toilets that are hygienic and sufficient for selected schools. 2. All selected school kids in the project are taught and trained to use toilets hygienically as well as maintain sanitation and cleanliness of public belongings.
Procedure
1. Select target schools in cooperation with the Primary Educational Service Area Office. 2. Survey the school toilets condition before improvement and renovation. 3. Organize a course that encourages community, teachers, and students’ presence. 4. Evaluate process and implementation, conclude budget for assessment. 5. Improve school toilets according to HAS standard. 6. Jointly examine the standard by Department of Health, Office of the Basic Education Commission, and Home Product Center Plc. 7. Set up teaching materials to explain toilets proper usage and maintenance. 8. Arrange toilets delivery ceremony and activities on toilets maintenance involvement. 9. Revisit every 3 months.
HOME PRODUCT CENTER PLC. 075
Development of Monitoring and Sustainable Assessment
Year 2006 - 2008 - HomePro officers visit every 3 months. Year 2009 - Monitored and evaluated toilets in the project, developed towards sustainability to maintain HAS (Healthy, Accessibility and Safety) standard. Year 2009 onwards - Improved and enhanced the toilets under HAS standard, and entered into partnerships network of public toilets improvement with Department of Health
Project Performance since the Beginning until December 31, 2013
2006
2007
2008
2009
2010
2011
2012
2013
1
6
3
4
5
5
7
10
3
20
11
18
11
17
20
35
135
20
215
131
210
219
200
314
494
1,803
Number of ProvinceYear
Total
Number of School Number of Toilet
ANNUAL REPORT 2013076
“Foundation of Retail Business in Dual Vocational Training”
Retail business is a fundamental for trading business and can be applied to business administration from a small scale to large scale. In the past, no institution offered a degree or teaching on this field so most of the people in retail business learned by doing.
As retail business in Thailand has significantly growing, the Company sees the importance of knowledge management and development on retail trading and commits to improve personnel competency to support the growth. Memorandum of Understanding (MoU) is signed between the Company and Office of Vocational Education Commission to build collaboration on vocational education and professional training on commerce majoring in retail business.
This project has an objective to collaboratively organize vocational education on bilateral system and enable students to be trained on professional experience on commerce majoring in retail business, on knowledge and skill as well as direct experience from real workplace. This collaboration is the development of teaching that supports students’ effectiveness to be in line with professional education, teachers, and trainee students. Training under such collaboration will broaden trainees’ knowledge and perspective at workplace particularly giving students an opportunity to learn of working skill on business related and service in a real working environment. This project is expected trainees to have passion for their profession and foresee the future growth of career path.
Office of Vocational Education Commission offers 2 programs consisting of (1) Bilateral system, advanced vocational certificate and; (2) I nternship program of 1 academic year.
Details of scholarships program in the previous year are as follows:
2012
2013
1
2
6
9
9
64
123
187
1,843,200
3,542,400
5,385,600
Year Period
Total
Number of Participating Academy Number of Scholarship
Value of Scholarship (THB
HOME PRODUCT CENTER PLC. 077
Academy participating in the project is as follows:
2012
2013
1. Thonburi Vocational College
2. Thonburi Commercial College
3. Bangna Commercial College
4. Don Meung Technical College
5. Pathumthani Technical College
6. Meenburi Technical College
7. Intrachai Commercial College
8. Samutprakan Technical College
9. Thanyaburi Technical College
Inception Year School
All academies participating this time play a significant role in the success of the project. In other words, these academies together with the Company worked together to design subjects that are suitable enough for the students to be equipped with modern knowledge and the Company can rest assured that the graduated students (new personnel) are knowledgeable and suit the Company’s position. Having received collaboration from several agencies can be considered as one of Thailand’s important milestones regarding business integration that sharpen students (future Company’s staff) with both theories and real experience on business operation training under close monitoring and training by the Company’s Education Service Center.
ANNUAL REPORT 2013078
“Blood Donation”
At present blood reserves at Thai Red Cross are not sufficient for patients in need of. Home Product Center Plc. is aware of this insufficiency and thrives to become part of social responsibility. As a result, “Blood Donation Project” takes place with an objective to donate blood from physically- healthy employees to Thai Red Cross 4 times per year in order to reserve for future patients.
Objective 1. To present as an act of royal charity to His Majesty the King 2. To help patients in need of blood donation 3. To promote health and wellness together with cultivate ethical awareness to employees 4. To encourage employees to participate in public activities
Amount of blood which HomePro’s employees donated in 2013
In 2013, 3,398 employees participated in this activity of which 2,892 cc. of blood were donated (from head office 439 units and branches nationwide 2,454 units). In total, blood donation accounted for 1,156,800 cc.
1
2
3
4
Total
82
108
128
120
438
450
572
780
652
2,454
532
680
908
772
2,892
Head officeQuarter
Branches
Amount of Blood Donated (Units)
Total
Note: 1 unit contains blood approximately 350- 450 cc
HOME PRODUCT CENTER PLC. 079
Conclusion
The Company has complied with corporate social responsibility in accordance with principles of the Stock Exchange of Thailand namely doing business with fairness, opposition to corruption, human rights, fair treatment to workers, commitment to consumers, environmental responsibility, and collaboration with community or society. The Company emphasizes on strengthening those subject matters with all stakeholders and related parties in the areas of economy, society, and environment.
According to those social responsibility activities and procedures conducted by the Company on a regular basis, there leads to a strong linkage between sustainable development and all stakeholders in many projects as follows:
• “Tao Kae Noi” (Young Entrepreneur) Project: development of contractors for mutual sustainable growth
• One Stop Shopping Home Center Business Operation: a complete service for customers
• HomePro’s Best Technicians Project: enhancement of Company’s technicians to meet global standard
• Home Care Service: service after sales for customers
• Demonstration of Self- Assemble: provide customers with basic instruction on how to manually assemble furniture
• “Kon Dee HomePro” (HomePro’s Decent Staff) Project: cultivate smart and decent culture in the organization
• Education Training Center: training and development of employees’ competency including career path
• Energy- Saving Campaign: HomePro Fun Walk Project and Solar Roof collaboration by renting a land for solar cell installation to promote alternative energy and reduce the country’s energy dependence on fuels import.
• Kids’ Toilet Project: cultivate hygienic behavior for elementary students
• Scholarship for diploma on retail business management: improve and increase efficiency for skilled workers
• Blood Donation Activity: promote health and wellness awareness as well as cultivate social contribution on employees
The Company determines to continuously deploy all of the above projects and, at the same time, improve content of each project to keep it updated to economics, social, and environmental contexts of each local area. The Company will also continue to strengthen the linkage of the subject matter to all related parties and stakeholders for efficient and sustainable growth.
ANNUAL REPORT 2013080
In the Board of Directors meeting 2/2014 on February 25, 2013, the Board of Directors, Audit Committee and management evaluated the Company’s internal control system. The evaluation was done on the following five criteria:
1. Organization and Environment
The Board of Directors opines that the Company has clear organization chart and has specified scope of authority, responsibility of each department in writing, having specified clear measureable target of business operation, which the setting of the target and work plan the management and each executive of each field of work have jointly considered and set the business target and the strategy of operation by using the result of operation in the past years as the basic information. It is then ensured to be properly and shall be able to achieve the target.
For our policy, operating regulation, and provision relating to ethics (Code of Conduct, the Company has specified such in the business ethics manual, which shall be revised from time to time as appropriate, for directors, executives, and employees in all departments to use as a guideline for operation. Regarding this business ethics manual, the Company has provided such in consideration of relevant laws and regulations including the effects which may occur to interested parties.
2. Risk Management
The Board of Directors opines that the group of executives has regularly considered and evaluated the risks that may affect the result of operation of the Company, by specifying operation plan of every year and fixed to have management meeting in every month in order to follow up the result of operation, evaluated the situation and trend of the risk factors closely for setting management method and for controlling the risk to be at the acceptable level, and notified relevant staff to be aware of and to comply with the measurement of risk management to prioritize key risk factors and formulate appropriate risk management measures to accommodate each level of risk for each business unit by encouraging concerned executives and employees of every level to comply with risk management requirements.
3. Controlling
The Board of Directors opines that the Company has specified the scope of authority, approval credit limit of executive in each level clearly in writing, and completely separate duty and responsibility for approval work, account booking and information technology, and the looking after of property separately in order to examine each other. In case the Company has entered into transactions with the major shareholders, director, executive, or relevant persons, the Company shall propose such transaction through the Audit Committee Meeting and complete such transaction as if such were made with outsider.
4. Information Technology and Communication System
The Board of Directors opines that the Company has prepared the notice calling for the Board of Directors Meeting, stating information and details of agenda to the meeting, including summary of information to the Board of Directors for consideration of at least 7 days before the meeting, and has made the complete minutes of the Board of Directors meeting which may be referable, and such can be used to examine the appropriateness in performing the duty of the Director.
The Company has selected the accounting policy that is generally accepted in accounting principle, and retained documents supplement to records properly. The Company hired Recall Enterprises (Thailand) Ltd., a document retaining company, as the document keeper with the appropriate controlling system.
Internal Control
HOME PRODUCT CENTER PLC. 081
5. Monitoring
The Board of Directors opines that the Company has added an agenda on monitoring the result of operation every month, in order to notify to the Board of Directors and to propose suggestions for work performing. For operation plan and budget, the Company will make and review them every half year.
The Company regularly conducts and audit by internal control system to ensure the compliance with the policy. There are two levels of internal control and compliance policies; namely (1) self-inspection between inter- related departments according to the good internal compliance; and (2) there are inspection and evaluation processes responsible by internal audit department. The internal auditor must report directly to the Board of Directors or the Audit Committee so that the internal auditors can perform their duties independently and accurately.
Apart from this, the Company’s auditor, Mrs. Gingkarn Atsawarangsalit, the auditor with certified license no. 4496 of EY Office Limited, as the external auditor of the Company for the year end on December 31, 2013 has given her comment on the assessment of the efficiency of the internal control of the Company’s accounting that no significant weak points were found in the internal audit system on the accounting.
Internal Audit Manager
On January 9, 2014, the Audit Committee meeting no.1/2014 has a resolution to appoint Mr. Aryuratas Chai-anan, Assist Vice President - Internal Audit to be the Internal Audit Manager since he has the experience in internal audit of the company for 10 years and in the same business of the company totaling 13 years. Passed the Certified Professional Internal Audit of Thailand (CPIAT) and has been trained in related courses of the internal audit such as, Audit Standard Information Technology Auditing, Risk Management etc., including he also has an understanding of the operations of the Company. As a result, it is appropriate to appoint him to perform such duties.
The Audit Committee is responsible for approving the appointment, removal, and transfer of the Internal Audit Manager.
ANNUAL REPORT 2013082
Dividend Policy of Home Product Center Public Company Limited
The Company has the policy to pay dividend to shareholders not less than 40% of the net profit of each year. However, the consideration for dividend payment will take other factors into account such as result of operation and financial status of the Company, Liquidity, Expansion of Business and other factors relating to the management of the Company. Each dividend payment is required to obtain approval from shareholders and Board of Directors.
Dividend payment history during 2011 - 2013 is as follows:
Dividend Policy of the Subsidiary
The subsidiary companies had no the dividend payment policy. However, it will consider to pay dividends based on its cash flow after statutory reserve as stipulated by law. In 2013, there was no the dividend payment.
Stock dividend payment rate
(amount of existing share : stock dividend)
Stock dividend rate per share (before dilution)
Cash dividend per share (unit : Baht/ share)
Total dividend payment (unit : Baht/ share)
Dividend payout ratio
(7 : 1), (Cash)
(Interim), (Final)
0.1429
0.1659
0.3088
83.61%
(5 : 1), (6 : 1)
(Interim), (Final)
0.3667
0.407523
0.407523
98.03%
(6 : 1)
(Interim)
0.1667
0.1853
0.1853
n/a
Period 2011 2012 2013
Dividend Policy
Remark : 1. The Company paid dividends from the 2011 profit totaling 0.3088 Baht/share by dividing into the interim dividend payment from the first 6 months operation of 0.1588 Baht/share (consisting of cash dividend of 0.0159 Baht/share and stock dividend at the rate of 7 existing shares per 1 stock dividend or equivalent to 0.1429 Baht/share), according to the resolution of the Extraordinary General Meeting of Shareholders No. 1/2011, and the final dividend payment from the last 6 months operation of another 0.15 Baht/share according to the resolution of the Annual General Meeting of Shareholders 2012.
2. The Company paid dividends from the 2012 profit totaling 0.407523 Baht/share by dividing into the interim dividend payment from the first 6 months operation of 0.22223 Baht/share (consisting of cash dividend of 0.02223 Baht/share and stock dividend at the rate of 5 existing shares per 1 stock dividend or equivalent to 0.20 Baht/share), according to the resolution of the Extraordinary General Meeting of Shareholders No. 1/2012, and the final dividend payment from the last 6 months operation of another 0.1853 Baht/share (consisting of cash dividend of 0.0186 Baht/share and stock dividend at the rate of 6 existing shares per 1 stock dividend or equivalent to 0.1667 Baht/share) according to the resolution of the Annual General Meeting of Shareholders 2013.
3. On November 15, 2013, the Company paid interim dividends at the rate of 0.1853 Baht/share consisting of cash dividend of 0.0186 Baht/share and stock dividend at the rate of 6 existing shares per 1 stock dividend or equivalent to 0.1667 Baht/share, according to the resolution of the Extraordinary General Meeting of Shareholders No. 1/2013.
HOME PRODUCT CENTER PLC. 083
1. Land and Houses Plc. - Being a major shareholder of the Company by holding 30.23 % of total paid-up capital, as of October 31, 2013. - With 2 co-directors 1. Mr. Anant Asavabhokhin 2. Mr. Naporn Soonthornchitcharoen
2. Quality Houses Plc. - Being a major shareholder of the Company by holding 19.8% of total paid-up capital, as of October 31, 2013. - With 3 co-directors: 1. Mr. Rutt Phanijphand 2. Mr. Anant Asavabhokhin 3. Mrs. Suwanna Buddhaprasart
3. Land and Houses Bank Plc. - With 2 co-shareholders: 1. Land and Houses Plc. 2. Quality Houses Plc. - With 4 co-directors: 1. Mr. Anant Asavabhokhin 2. Mr. Rutt Phanijphand 3. Mr. Naporn Soonthornchitcharoen 4. Mrs. Suwanna Buddhaprasart
4. Quality Houses Leasehold Property Fund - With 2 co-shareholders 1. Quality Houses Plc. 2. Land and Houses Plc.
Sales incomeAccounts Receivable
Sales incomeAccounts Receivable
Interest incomeDeposit with financialinstitution Rental and service income
Other ReceivablesRental and service expensesOther PayablesRental guarantee deposit
Such value was the appropriate selling price as it was the same as the market price which the Company sells to the other manufacturers or sellers.
Such value was the appropriate selling price as it was the same as the market price which the Company salls to the other manufacturers or sellers.
The Company received the interest with the same rate as other customers of the bank, such rate was a normal rate of other banks and financial institutions.
Such value was generated from the transactions of rent and services fee for the space in the Wave Place building. The Audit Committee opined that such price was calculated from the appropriate rate.
47,3278,207
35916
12,63764,619
5,566
37820,282
1,5813,000
61,9624,999
2,713252
20,970819,161
2,402
3919,418
1,1243,000
TransactionName of Company / Nature of relationship Amount (Thousand Baht)
31 Dec 13 31 Dec 12
Audit Committee and Management’s opinion
Related Transaction
In 2013, the Company and its subsidiary had significant business transactions with related parties (related by means of having common shareholding or co-directors), which have been concluded on commercial terms and bases agreed upon in the ordinary course of business between the Company and those companies. Furthermore, the Company has no related transection neither by way of financial support nor guarantee other than in subsidiary of the Company.
As of December 31, 2013 and 2012, the Company had outstanding balance with the related transaction, which can be summarized as follows:
ANNUAL REPORT 2013084
Necessity and Appropriate Reason of Transaction
The connected transaction made was necessary and reasonable to create the highest benefit to the Company. The Audit committee concluded that such was in accordance with business and the general ordinary course of received and paid consideration by and from the Company was fair.
Measure/Procedure of Approval of Connected Transaction
The connected transaction being made at present and expectedly in the future, e.g. sales of goods to Land and Houses Plc. and Quality Houses Plc., purchase of goods from Quality Construction Products Plc., renting space in the Wave Place building of Quality Houses Leasehold Property Fund, leasing space and deposit transaction with Land and Houses Bank Plc.
For the sale of goods transaction, the Company determined the price according to the market price which was the price that buyer could buy them from other manufacturers or sellers. Generally, the specification and price of goods would be determined earlier. For the purchase of goods transactions, the Company purchased them at the market price which it could purchase from other manufacturers or sellers. The Audit Committee considered the connected transactions and concluded that the Company received and paid remuneration in the fair price according to the general ordinary course of business.
Policy or Tendency of Inter-Transaction
The Company has policy to specify the trade conditions for entering into inter-transaction to be as normal business operation. Price of products to be sold shall be prescribed at the level that can be competed to other vendors.
As for Inter-transaction that may be occurred in the future, the Board of Directors shall comply with the laws on Securities and Stock Exchange, and Regulations, Announcement, Order, or Regulations of Stock Exchange of Thailand, and including compliance with the regulations on disclosure of information of connected transaction and acquiring or disposing of material assets of the Company or the Subsidiary.
However, if there will be inter-transactions of the Company or its subsidiary occurred to person or stakeholder who may have conflict of benefit, or may have conflict of interest in the future, the Company shall have the Audit Committee give the opinion on necessity and appropriateness for such transactions. In case the Audit Committee is not skillful in considering the inter-transactions that may be occurred, the Company shall arrange for an Independent expert or auditor of the Company to give opinion on such inter-transactions in order to bring such information to support for the decision making of the Board of Directors or shareholders as the case may be. However, the Company shall disclose inter-transactions in the note of the financial statement audited by the Auditor of the Company.
HOME PRODUCT CENTER PLC. 085
Management Discussion and Analysis of Financial Status and Operating Results
1. Overview
The year 2013 was a year that the Thai economy did not expand as expected with a gross domestic product (GDP) growth of only 2.9%. The economic slowdown was due to a number of factors such as rising concern over higher cost of living, increasing household debt and the delay in infrastructure investment as well as political issues that began since the end of 2013. Meanwhile, exports have not fully recovered due to the beginning of economic slowdown in China, which is the main export market due to the Chinese government’s policy to tighten economic stimulus package. Even though the United States’ economy is likely to recover, the key driver was not due to international trade.
The overall purchasing power shows sign of deceleration, while the Private Consumption Index remains at the same level as last year as the public remains cautious on spending due to lower confidence level and higher household debts.
Nevertheless, in 2013, the Company had achieved consecutive growth, which is highest number of new stores, driven by expansion of 11 new HomePro branches and introduction of 2 branches of new business unit called “Mega Home”. The Company has expanded its home improvement retail business to cover customers in the middle-to - upper income segment through HomePro and in the middle-to-lower income segment through Mega Home.
TargetCustomer
Product Group
Foundation &Structure
HomeImprovement
HomeFurnishing
ANNUAL REPORT 2013086
Although the market condition of home improvement retail business is facing heightened competition from newcomers, such competition is concentrated only in the middle-to-lower customer segment. Whereby, the branches of other home-improvement brands are concentrated only in some areas, such as Northeastern part and Central part of Thailand. This means that there is still an ample space in the market for HomePro. In addition, aggregated demand for home improvement products is expected to grow in the long run due to continuous movement of dwellers from rural to urban areas.The change of the life style towards urban living behavior.
Some of the products sold in Mega Home are similar to those sold by HomePro’s suppliers. This enables the suppliers to increase their product line available for sale; while, at the same time, HomePro can have better trading terms. This helps build a long-term partnership between HomePro and its suppliers.
Changes in the accounting policy that significantly affect HomePro’s financial statements in the past year are as follows.
TAS 12 Income Taxes (revisedsinceJanuary1, 2013)
This accounting standard requires an entity to identify temporary differences arising fromdifferences between the carrying amount of an asset or liability in the statement of financial position and its tax base in order to recognise the tax effects as deferred tax assets or liabilities subjecting to certain recognition criteria. The Company and its subsidiaries havechanged this accounting policy during the current period and restated the prior year’s financial statements, presented as comparative information, as though the Company and its subsidiaries had initially recognised the tax effects as deferred tax assets or liabilities. The cumulative effect of this change in accounting policy has been presented in Note 4, 5.17 and 27 to the financial statements.
Tax Rate
In October 2011, the cabinet passed a resolution to reduce the corporate income tax rate from 30 percent to 23 percent in 2013, and then to 20 percent from 2013 onward. In addition, in order to comply with the resolution of the cabinet, in December 2012, the decreases in tax rates for 2013 - 2014 were enacted through a royal decree. The Company has reflected the changes in the income tax rates in its deferred tax calculation, as presented above.
TAS 19 (revised 2012) Employee Benefits (the Company has applied sinceJanuary 1,2010 before the effective date)
The Company hired a professionally qualified independent actuarial company to assess the value of provision for employee retirement benefits using the Projected Unit Credit Method, in order to reflect such value appropriately. The Company applied the change retrospectively. The cumulative effect of the change in accounting policy has been presented under the heading of “Cumulative effect of the change in accounting policy for provision for employee benefits” in the statements of changes in shareholders’ equity. Whereas, actuarial gains and losses arising from post-employment benefits are recognised immediately in other comprehensive income.
The cumulative effect of this change in accounting policy has been presented in Note 5.15, 20 and 24 to the financial statements.
HOME PRODUCT CENTER PLC. 087
2. Operating Result
Through the factors as mentioned above, the Company’s business performance improved from the previous year. The revenue increased 16.13% while net profit increased 14.89%. The key drivers to improvement in the Company’s performance aresame store sales growth, opening of 11 new HomePro branches and the launch of 2 branches of new business unit called MegaHome, even though the Company had start-up cost for the expansion of MegaHome stores and introduction of HomePro in Malaysia.
Comparing the results of operation for the year ended December 31, 2013 to the same period of year 2012 as follows:
2.1 Revenue from Sales
In 2013, the Company and its subsidiary generated revenue from sales of Baht 40,111.64million, increased from the previous year by Baht 5,570.09million or 16.13%. The increase was mainly driven by the same store sales growth, sales of the 11 newly opened branches in 2013, and sales from new business establishment of “Mega Home” total of 2 branches.
However, the Company utilizes another efficiency index for sales growth aside from overall growth. Such index is “comparable store growth”, which, despite an unfavorable economic condition and negative factors in the past year, still impressively stood at 3.5-4%, higher than GDP growth at 2.9% in 2013 and higher than the same indices of comparable businesses that went below GDP growth.
2.2 Other Income
In 2013, the Company and its subsidiary generated other income of Baht 2,718.59million, increased from 2012 by Baht 290.85million or 11.98%. The proportion of other income as percent to sales was at 6.78%. The details of increase are as follows:
- Revenue from rental and service, increased by Baht 105.22million, from an increase in the space and rental income of retail in HomePro and Market Village. - Other Revenues, increased by Baht 185.63million, from advertising fee, support fee of promotional activities from business partners, service fee related to sales of goods.
2.3 Cost of Sales and Gross Profit Margin
In 2013, the Company and its subsidiary had the cost of sales of Baht 29,346.06million, increased from the previous year by 3,786.67 million or 14.82%, which was the result of the increase of sales.
The Company had gross profit of Baht 10,765.58million, increased from the previous year of Baht 1,783.42million. The gross profit margin as percent to sales was 26.84%, moved up from the previous year of 26.00 %.
The increase of gross profit was a result of the improvement of product mix especially an increase in sales from private brand products, the increase in efficiency of inventory management system as well as the increase in volume discount of order in the large quantity. As a result, the increase rate of cost of goods sold is less than the increase rate of sales.
ANNUAL REPORT 2013088
2.4 Selling and Administrative Expenses
In 2013, the Company and its subsidiary had selling and administrative expenses amounted to Baht 9,350.32 million, increased from the previous year by Baht 1,569.18million or 20.17%. This SG&A represents 23.31% to sales which increase from the same period of last year of 22.53%. The details of expenses in each group are as follows:
- Selling expenses of Baht 8,095.50 million, being expenses for branches, operation and distribution unit, increased by Baht 1,304.50million from expenses on salaries, cost of transportation and cost of service, maintenance, depreciation, marketing cost, and startup cost of “Mega Home” business. - Administrative expenses of Baht 1,205.54 million, increased by Baht240.12 million, mostly being expenses of Head Office. - Other expenses amounted to Baht 49.28 million, increased from the previous year by Baht 24.57 million from Loss from foreign exchange losses and assets disposaldue to renovation work to modernize retail spaces.
2.5 Financial Expenses
Financial Expenses of year 2013 were Baht 276.62million, increased from the previous year by Baht 130.45million or 89.25%, while the proportion as percent to sales was 0.69 %, increase from the previous year of 0.42. This is a result of the increase in short-term loan, debentures issued in the third quarter of 2013 long-term loan from a financial institution in the second quarter in 2013.
However, the Company has analyzed and considered funding cost based on various funding sources such as internal cash flow, bank loan or issuance of corporate bonds in order to achieve optimal cost of funds that comply with the Company’s policy.
2.6 Net Profit
For the result of operation in 2013, the Company and its subsidiary had net profit of Baht 3,068.48 million, increased from the previous year by Baht 397.69million or 14.89%. The increase of net profit was caused by the increase of sales and other income, and the increase of gross profit margin from the increase rate of cost of goods sold which was less than the increase rate of sales.
These resulted in the proportion of net profit to sales decreased from 7.73% in 2012 to 7.65% in 2013.This mainly due to higher investment in launching 11 new “HomePro” stores and opening of 2 stores under the name “MegaHome”, resulted in higher financial costs in 2013. Hence, financial cost continually increased since 2013.
2.7 Return on Equity
The return on equity as of December 31, 2013 was 27.10%, decreased from the previous year of 29.67%.The result mainly from by the increase in capital to accommodate stock dividend in April 2013in the ratio of 6 existing shares per 1 dividend shareand in November 2013in the ratio of 6 existing shares per 1 dividend share, total increasing by 2,543.52 million shares or36.10%. For paying Stock Dividend, in order to provide the shareholder return, to increase the stock liquidity for share trading in the Stock Exchange and to retain cash liquidity for Company expansion.
HOME PRODUCT CENTER PLC. 089
3. Asset Management
Comparing financial status as at December 31, 2013 and December 31, 2012.
As at December 31, 2013, the Company and its subsidiary had total assets of Baht 35,941.68million, increased from December 31, 2012 by Baht 10,073.31million or 38.94%. The growth of asset value was due to the change of significant transactions as follows:
3.1 Cash and cash equivalents decreased by Baht 483.16million which was from payment to suppliers for goods, construction cost for expansion during the year, and startup cost of new business in 2014.
3.2 Account receivable increased by Baht 16.93million, and other receivables increased by Baht 143.53million, which was from the support fee of promotional activities, other service fee. That was the result of the increase in the space and rental income of retail in HomePro and Market Village.However, the Company analyzed an account receivable aging. As at December31,2013,the Company had trade and other receivablesaging more than12 months of Baht 3.81 million, and the allowance for doubtful bad debts of Baht 3.32 million.
3.3 Net inventory increased by Baht 1,153.10million, which was a result of the increase in number of new branches. The Company manages its inventory using a computer system which helps to track and compare aging inventory to the Company’s threshold to prevent outdated or deteriorated inventory. The Company also has an inventory physical counting plan, which will be monitored by a designated team.
3.4 Net property, plant and equipment, net leasehold rights and software totaling increased by Baht 8,791.91 million or 54.21%, which was from the investment in new store expansion in 2013 and 2014because most newly opened branches were constructed on the land owned by the Company.
3.5 Investment properties in subsidiaries increased by Baht 175.99million from the construction of the car park at Hua-Hin Market Village and the renovation from underground car park to rental spaces at Hua-Hin Market Village.
4. Liquidity and Capital Sufficiency
Summary of cash flow statement as of December 31, 2013 compared to the same period of 2012 is as follows;
Unit: MB
Transactions
ConsolidatedFinancial Statement
SeparateFinancial Statement
2013 2012 2013 2012
Cash from operating activities
Cash from investing activities
Cash from financing activities
Transaction adjustments
Net increase (decrease) in cash
5,193.44
(9,661.52)
3,985.26
(0.35)
(483.16)
3,309.53
(5,542.24)
1,546.07
(0.06)
(686.71)
5,109.81
(9,625.58)
3,975.06
-
(540.71)
3,289.43
(5,541.02)
1,546.07
-
(705.52)
ANNUAL REPORT 2013090
As of December 31, 2013, the Company and its subsidiary’s cash and cash equivalents were Baht 807.46 million, net decreased from December 31, 2012 by Baht 483.16 million, which derived from the following activities:
- Net cash from operating activities of Baht 5,193.44million which were received from the net profit before changes in operating assets and liabilities of Baht 5,941.18million, and working capital increased from changes in operating assets and liabilities e.g. trade and other receivables increased by Baht 159.16 million, inventories increased by Baht 1,257.71 million, other current assets increased by Baht 146.41million, trade and other payables increased by Baht 2,052.73 million, other liabilities increased by Baht 36.39 million, and interest and corporate income tax payment for the total of Baht 1,064.87 million.
- Net cash used for investing activities totaled Baht 9,661.52 million which such amount was the investment in land and assets for the expansion of branches in 2013and 2014 for the total of Baht 9,587.60million, and the computer software for the total of Baht 73.92 million.
- Cash received from financing activities, net used in the total of Baht 3,985.26 million in which such amount was derived from the short-term loan for Bath 1,360.00 million, the long-term loan from a financial institution for Baht 1,004.30 million, debentures issued for Baht 4,000 million, including payment of the long-term loan for Baht 400.00 million, and the debenture for Baht 1,700.00 million.
4.1 Liquidity Ratio
As of December 31, 2013, the Company and its subsidiaries have current assets in the total of Baht 9,220.82 million and current liabilities in the total of Baht 14,331.30 million. In this regard, such amount can be calculated into liquidity ratio of 0.64 times which was decreased from the previous year’s ratio of 0.70 times. The Company has the source of short-term financing for keep adequate liquidity by Bank overdrafts and short-term loans, and international trade finance facilities.
4.2 Capital Structure
The capital structure of the Company as of December 31, 2013 mainly consisted of the Company’s unsecured long-term credit facilities from a financial institution, and unsubordinated and unsecured debentures. For the total debt of Baht 23,225.30 million, in which Baht9,787.09 million was the financial debt. In this regard, if such amount is calculated as the total amount of Debt to Equity ratio, it will be equivalent to 1.83which increased from the previous year of 1.61.
According to the terms and conditions or requirements stipulated to duties of bond issuers, the issuers shall maintain Financial Debt to Equity Ratio of not over 1.75 times.For the newly issued debentures from 2013 onwards, the Company requires that ratio of interest bearing securities to shareholders’ equity must not exceed 2.5 times. However, the Company is able to maintain its financial strengths by keeping the Financial Debt to Equity ratio at 0.77 times. The Company Financial Debt to Equity ratio during 2011 - 2013 are as follows:
Financial Debt to Equity ratio 0.37 0.56 0.77
2011 2012 2013
HOME PRODUCT CENTER PLC. 091
4.3 Shareholders' equity
As of December 31, 2013, shareholders’ equity was Baht 12,716.38million, increased from the previous year by Baht 2,789.11million or up by 29.10% which the increase was from following transactions:
- The issued and paid-up ordinary share was increased by Baht 2,548.12 million due to the payment of stock dividend in April 2013 by Baht 1,173.61 million and in November 2013 Baht 1,369.91 million, a number of share totaling increase from stock dividend paymentBaht 2,543.52million. Also, another part of issued and paid-up ordinary share was increased from the exercise of right under warrants to purchase ordinary shares of employee No. 4 for the total of Baht 4.85 million.
- Retained earnings was increased by Baht 241.08million by dividing into the appropriated retained earnings for statutory reserve of Baht 156.48million and the unappropriated retained earnings of Baht 84.6million.
4.4 Capital Expenditure
In 2013, HomePro had Net Capital Expenditure of approximately Baht 9,805 million. Within this amount, approximately Baht 9,472 million was used for the purpose of building construction, land purchase, payment for land leasehold rights, for new branches opened in 2013 onwards, modernize of existing branches and to have more selling space, and expansion of the space of distribution centers. Also, approximately Bath74million was used to expand parking space in Market Village HuaHin, and another Baht 260 million was used in the purchase of software. Sources of fund include cash flow from operation, loans from financial institutions, and debentures.
4.5 Ability to Source funding Loanand repayment
At present, the Company raises both short-term and long-term fund by entering into credit agreements with financial institutions and by issuance of debentures, which are rated by TRIS annually and at the time of issuance, which the Company have the covenant to maintain the net debt to equity ratio not more than 1.75 for the debentures issued before 2013 and 2.5 for the debentures issued after 2013 onwards.
5. Contractual Obligation
As of December 31, 2013, total liabilities of the Company and its subsidiary were Baht 23,255.30million increased from 2012 by Baht 7,314.20million or 45.88%, which was from the change of the following crucial transactions:
- Short-term loan was increased by Baht 1,360 million which will be due in February 2014 and March 2014 at 500 million Baht per installment.
- Accounts Payable was increased by Baht 1,945.84million which was from the increase products order according to sales and store growth.
- Debenture - net was increased by Baht 2,300 million, during the year, there were redemption of Baht 700 and 1,000 million of the unsubordinated and unsecured debentures 1/2010 and 2/2010 and the issuance of the unsubordinated and unsecured debentures 1/2013 for Baht 4,000 million in the third quarter of 2013 for the stores expansion.
- Net long-term loans from a financial institution increased by Baht 600 million, in which Baht 500 million will mature in 2014.
The long-term loan, finance lease, operating leases categorized by maturity has been presented in Note 33.1, 18 and 32.1 to the financial statements.
ANNUAL REPORT 2013092
6. Factors or events that may affect HomePro’s financial status or performance in the future
Political unrest in Thailand that occurred since the end of 2013 and continued to the beginning of 2014 does not seem to fully resolve. The absence of stimulating factors in consumption, export sector, and government investment is also another factor that dragged down consumer confidence. These two factors may negatively affect HomePro’s sale and cash inflow. However, the Company has prepared its annual plan and constantly tracked its performance through management reports; therefore, it can adjust its operations or determine mitigation plans to respond to negative events quickly. In addition, HomePro has prepared Risk Management Plan, in which a risk appetite associated with each risk factor is determined. This can be used as a guideline to help manage problems should they occur.
Management Discussion and Analysis, and overview
Thailand’s economic environment has direct impact on businesses and industry in general, led to a slowdown in investment and consumption of the private sector, which have similar volatility as economic confidence level. In addition, the instability of political situation in the country led to a decrease in consumer confidence index to the lowest level in 2 years at 71.5 in January 2014, which have direct and indirect impact on the Company. However, the Company has monitored the situation and revised corporate strategy regularly to be in line with the current situation.
Despite a slowdown in global consumption, retail businesses had gradually improved, partially due to strong demand in household products as a result of increase in urbanization and the change of consumer purchasing behavior in modern trade stores,while retailers also engaged in more aggressive sales promotion to stimulate private consumption. In addition, global economic slowdown also led to lower interest rates as a result of relaxation of monetary policy in 2014.
As a result of anticipated economic slowdown in the beginning of 2014, the Company had prepared for the demand fluctuation by enhancing efficiency of inventory control, deliberating on product selection and increasing the proportion of private brand sales in order to optimize cost of goods sold and reduce lead time to market in order to ensure sufficient liquidity and stability of working capital.
The Company also benefited from having retail stores that cover many regions across the country while majority of customers are those with high purchasing power. These factors had increased the flexibility and enhanced risk diversification despite being exposed to the fluctuation of the Thai economy.
Although several factors occurred, the Company views that the effects of such factors is short-lived. Therefore, long-term strategies must be continuously formulated. In the past year, HomePro expanded its business through a new brand called “Mega Home”, which is designed to serve customers in the middle-to-lower group, a segment that offers significant room for growth. Mega Home is HomePro’s response to the continuous growth of home improvement business in Thailand. In 2014, HomeProstill increase the new branches under the brand “Mega Home” continually.
To achieve its vision to be a leader in home center business in Thailand and South East Asia, HomePro studied home center market in Malaysia and decided to make investment by establishing Home Products Center (Malysia) SDN. BHD. with a plan to launch the first branch in 4Q/2014. Currently, the company has started hiring to prepare for the opening of the first branch, as a result incurring expenses. Nevertheless, HomePro has prepared all relevant plans covering all aspects of the work. With HomePro’s experiences in products and proven success in this business in Thailand, the Company strongly believes that the broadening of its business coverage into other countries will pave a solid ground for HomePro’s success in the long run.
HOME PRODUCT CENTER PLC. 093
Auditing Fee
Other Service
Transactions
2,750,000
80,000
2,830,000
2,520,000
100,000
2,602,000
2013Transactions 2012
Note: Other service is the fee for observing inventory destruction.
Auditing Fee
According to the minutes of the annual general shareholders meeting in 2013, which resolved to appoint the Auditors of EY Office Limited (Formerly known as Ernst & Young Office Limited) as the Company’s auditor of 2013, with the fee of Baht 2,680,000.
The actual audit fee for 2012 and 2013 included auditing fee for the Company and its subsidiary, and other services fee as follows:
ANNUAL REPORT 2013094
Dear Shareholders
The Audit Committee of the Company consists of 3 independent directors who have abilities, qualifications and independent according to the regulations of the Stock Exchange of Thailand by having Mr. ApilasOsatananda, as Chairman, Mr. ThaveevatTatiyamaneekul and Mr. ChaninRoonsamrarn, as directors, having the duty to examine the reliability of financial statement.
For the year 2013, the Audit Committee has performed the duty according to the scope of responsibility as stipulated in the charter of the Audit Committee and according to the assignment from the Company’s Board of Directors. There were 14 meetings, and the auditor was invited to attend for the agenda which was relevant, details of attending by Audit Committee are as follows:
Mr. Apilas Osatananda
Mr. Thaveevat Tatiyamaneekul
Mr. Chanin Roonsamrarn
13 / 14
13 / 14
14 / 14
Name - Surname Attendance/Number of all meeting in 2013 (times)
Audit Committee Report
The Audit Committee has the duty and responsibility as assigned by the Board of Directors, which includes the review for the company in order to have the accurate and sufficient financial report, have efficient internal control system and corporate governance, have the compliance with relevant laws and regulations, have monitored the transaction which may have conflict of interest in order to be in compliance with the relevant rules and regulations and to earn the utmost benefits to the company, as well as the selection and proposing the opinion for appointment of the external auditor.
Essence of the Work Performed in year 2013
1. Having considered and review the quarterly financial report of the company and the annual financial statements before such were disclosed to the Stock Exchange of Thailand and the Office of the Securities and Stock Exchange Commission, which such was made in the agenda of the review of the financial report of the company. 2. Having considered the selection and nomination of company’s independent auditor and determination of the audit fee to propose to the Company’s Board of Directors for the request for approval from the meeting of shareholders. 3. Having convened with the independent auditor for 4 times for considering the guidelines for the performance and scope for the proceeding to examine the accounting, for the result of the audit and recommendation in order to ensure that the audit of the financial statement has been made completely and appropriately according to the standard of accounting audit, which the meeting with the auditor had no attendance of the management. 4. Having had the meeting with the Office of Internal Audit for the operation and scope of proceeding, the review of audit plan in order to ensure that the internal audit has been made completely and appropriately according to the standard of internal audit, which for the year 2013, the audits were made to evaluate the sufficiency and efficiency of the internal control system of the Company and its subsidiary. In general, and there was an acknowledgement of the report on the result of the audit and following up of the improvement and correction according to the recommendations in order to enhance more effectiveness and efficiency to the internal control system.
HOME PRODUCT CENTER PLC. 095
5. Having reviewed the performance to be in compliance with the laws on Securities and Stock Exchange, the rules of the Stock Exchange or the laws relevant to the business proceeding of the company. 6. Having considered the disclosure of information, inter and related transactions and the transaction which may have conflicts of interest. 7. Having made the evaluation of the sufficiency and appropriateness of the internal control system which covers the matter of organization and environment, risks management, the operation control of the management, information technology and communication, and tracking system. The Audit Committee has the following opinion;
1. The financial report of the Company is reliable, accurate and complete according to the generally accepted accounting principle and has sufficiently and timely disclosed material information. 2. The company has sufficient and efficient internal control system, risks management system, system of operational control, and the tracking system. 3. The Company has not performed any act in violation to the laws on Securities and Stock Exchange, the rules of the Stock Exchange or the laws relevant to the business of the Company. 4. The entering into the transaction with related business or the entering into the transaction which may have conflicts of interest have been made in accordance with the law, the rules of the Stock Exchange of Thailand, with appropriate reason for the utmost benefits for the Company, and have no indication or other observations to imply any abnormal circumstance. 5. The appointed external auditor has experience for the work, and has coverage network and is acceptable both in the country and overseas, which such causes the standard of the company’s audits to be in the international level. Also, every auditor and the person who were assigned to sign to certify the financial statements are independent, have no relation or transaction which may cause conflicts of interest with the Company. This can be ensured that the accounting audits were made completely and appropriately according to the accounting standard and also were efficient and transparent. 6. The Audit Committee has performed the duty independently, completely and correctly, according to the Charter that the Audit Committee has prescribed with good cooperation from every party concerned.
Mr. Apilas OsatanandaChairman of the Audit Committee
ANNUAL REPORT 2013096
Dear Shareholders
The company consolidated financial statements of Home Product Center Public Company Limited and its subsidiary
have been prepared in conformity with the requirements of the Public Company Act B.E. 2535 (1992), the Securities and
Exchange Act B.E. 2535 (1992), the Announcement of the Department of Commercial Registration dated September 14, 2001,
and the accounting standards prescribed by the Federation of Accounting Professions.
The Board of Directors had an opinion that the company’s overall internal control system is at satisfactory level,
sufficient to maintain the assets and to protect from fraud, and is responsible for the financial report of the Company and
its subsidiary in order to ensure that it shows the actual result of operation, financial status, and cash flows. There have been
proper recording of accurate and complete accounting information. Preparing of the financial reports has been considered
of selecting appropriate accounting policy and regularly in compliance with the general accepted accounting standard,
and there has been disclosing of sufficient significant information in the supplementary to the financial statements.
(Mr. Anant Asavabhokhin) Chairman
(Mr. Khunawut Thumpomkul)Managing Director
HOME PRODUCT CENTER PLC. 097
Report of Board of Directors’Responsibilities in the Financial Statements
Independent Auditor’s Report
To the Shareholders of Home Product Center Public Company Limited
I have audited the accompanying consolidated financial statements of Home Product Center Public Company Limited and its subsidiaries, which comprise the consolidated statement of financial position as at 31 December 2013, and the related consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, and have also audited the separate financial statements of Home Product Center Public Company Limited for the same period.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Opinion
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Home Product Center Public Company Limited and its subsidiaries and of Home Product Center Public Company Limited as at 31 December 2013, and their financial performance and cash flows for the year then ended, in accordance with Thai Financial Reporting Standards.
ANNUAL REPORT 2013098
Emphasis of matter
I draw attention to Note 4 to the financial statements regarding the change in accounting policy due to the adoption of Thai Accounting Standard 12 Income Taxes. The Company has restated the consolidated and separate financial statements for the year ended 31 December 2012, presented herein as comparative information, to reflect the adjustments resulting from such change. The Company has also presented the consolidated and separate statements of financial position as at 1 January 2012 as comparative information, using the newly adopted accounting policy for income taxes. My opinion is not qualified in respect of this matter.
Gingkarn Atsawarangsalit Certified Public Accountant (Thailand) No. 4496 EY Office Limited (Formerly Known as Ernst & Young Office Limited) Bangkok: 25 February 2014
HOME PRODUCT CENTER PLC. 099
ANNUAL REPORT 2013100
Statement of financial positionAs at 31 December 2013
The accompanying notes are an integral part of the financial statements.
HOME PRODUCT CENTER PCL. 101
Statement of financial position (continued)As at 31 December 2013
The accompanying notes are an integral part of the financial statements.
ANNUAL REPORT 2013102
Statement of financial position (continued)As at 31 December 2013
The accompanying notes are an integral part of the financial statements.
HOME PRODUCT CENTER PCL. 103
Statement of comprehensive incomeFor the year ended 31 December 2013
The accompanying notes are an integral part of the financial statements.
ANNUAL REPORT 2013104
Statement of comprehensive income (continued)For the year ended 31 December 2013
The accompanying notes are an integral part of the financial statements.
HOME PRODUCT CENTER PCL. 105
Cash flow statementFor the year ended 31 December 2013
The accompanying notes are an integral part of the financial statements.
ANNUAL REPORT 2013106
Cash flow statement (continued)For the year ended 31 December 2013
The accompanying notes are an integral part of the financial statements.
HOME PRODUCT CENTER PCL. 107
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HOME PRODUCT CENTER PCL. 109
Notes to consolidated financial statementsFor the year ended 31 December 2013
Home Product Center Public Company Limited and its subsidiaries Notes to consolidated financial statements For the year ended 31 December 2013
1. General information
Home Product Center Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. Its major shareholders are Land and Houses Public Company Limited and Quality Houses Public Company Limited, which were incorporated in Thailand. The Company is principally engaged in the trading of a complete range of goods and materials for construction, addition, refurbishment, renovation, and improvement of buildings, houses, and residences place, and provision for related services to retail business, together with space rental and provide utilities service. Its registered address is at 96/27 Moo 9, Tambol Bangkhen, Amphur Muang, Nonthaburi.
As at 31 December 2013, the Company has a total of 64 branches operating in Bangkok and other provinces (2012: 53 branches).
2. Basis of preparation
2.1 The financial statements have been prepared in accordance with Thai Financial Reporting Standards enunciated under the Accounting Profession Act B.E. 2547 and their presentation has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 28 September 2011, issued under the Accounting Act B.E. 2543.
The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from the Thai language financial statements.
The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.
2.2 Basis of consolidation
a) The consolidated financial statements include the financial statements of Home Product Center Public Company Limited (“the Company”) and the following subsidiary companies (“the subsidiaries”):
Country of Percentage of Company’s name Nature of business incorporation shareholding
2013 2012 Percent Percent Market Village Company Limited Space rental Thailand 99.99 99.99 Home Product Center (Malaysia)
Sdn. Bhd. Retail business Malaysia 100.00 100.00
ANNUAL REPORT 2013110
Country of Percentage of Company’s name Nature of business incorporation shareholding
2013 2012 Percent Percent Mega Home Center Company
Limited Retail business Thailand 99.99
DC Service Center Company Limited
Services of distribution of goods, delivery and installation
Thailand 99.99
b) Subsidiaries are fully consolidated as from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases.
c) The financial statements of the subsidiaries are prepared using the same significant accounting policies as the Company.
d) The assets and liabilities in the financial statements of overseas subsidiary company is translated to Baht using the exchange rate prevailing on the end of reporting period, and revenues and expenses translated using monthly average exchange rates. The resulting differences are shown under the caption of “Exchange differences on translation of financial statements in foreign currency” in the statements of changes in shareholders’ equity.
e) Material balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated financial statements.
f) Noncontrolling interests represents the portion of profit or loss and net assets of the subsidiaries that is not held by the Company and are presented separately in the consolidated profit or loss and within equity in the consolidated statement of financial position.
2.3 The separate financial statements, which present investments in subsidiaries under the cost method, have been prepared solely for the benefit of the public.
3. New accounting standards
Below is a summary of accounting standards that became effective in the current accounting year and those that will become effective in the future.
(a) Accounting standards that became effective in the current accounting year
Accounting standards: TAS 12 Income Taxes TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of
Government Assistance TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates
Financial Reporting Standard: TFRS 8 Operating Segments
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Accounting Standard Interpretations: TSIC 10 Government Assistance No Specific Relation to Operating Activities TSIC 21 Income Taxes Recovery of Revalued NonDepreciable Assets TSIC 25 Income Taxes Changes in the Tax Status of an Entity or its Shareholders
Accounting Treatment Guidance for Transfers of Financial Assets
These accounting standards, financial reporting standard, accounting standard interpretations and accounting treatment guidance do not have any significant impact on the financial statements, except for the following accounting standard.
TAS 12 Income Taxes
This accounting standard requires an entity to identify temporary differences arising from differences between the carrying amount of an asset or liability in the statement of financial position and its tax base in order to recognise the tax effects as deferred tax assets or liabilities subjecting to certain recognition criteria. The Company and its subsidiaries have changed this accounting policy during the current period and restated the prior year’s financial statements, presented as comparative information, as though the Company and its subsidiaries had initially recognised the tax effects as deferred tax assets or liabilities. The cumulative effect of this change in accounting policy has been presented in Note 4 to the financial statements.
(b) Accounting standards that will become effective in the future Effective date
Accounting Standards: TAS 1 (revised 2012) Presentation of Financial Statements 1 January 2014 TAS 7 (revised 2012) Statement of Cash Flows 1 January 2014 TAS 12 (revised 2012) Income Taxes 1 January 2014 TAS 17 (revised 2012) Leases 1 January 2014 TAS 18 (revised 2012) Revenue 1 January 2014 TAS 19 (revised 2012) Employee Benefits 1 January 2014 TAS 21 (revised 2012) The Effects of Changes in Foreign
Exchange Rates 1 January 2014
TAS 24 (revised 2012) Related Party Disclosures 1 January 2014 TAS 28 (revised 2012) Investments in Associates 1 January 2014 TAS 31 (revised 2012) Interests in Joint Ventures 1 January 2014 TAS 34 (revised 2012) Interim Financial Reporting 1 January 2014 TAS 36 (revised 2012) Impairment of Assets 1 January 2014 TAS 38 (revised 2012) Intangible Assets 1 January 2014
ANNUAL REPORT 2013112
Effective date Financial Reporting Standards:
TFRS 2 (revised 2012) Sharebased Payment 1 January 2014 TFRS 3 (revised 2012) Business Combinations 1 January 2014 TFRS 4 Insurance Contracts 1 January 2016 TFRS 5 (revised 2012) Noncurrent Assets Held for Sale and
Discontinued Operations 1 January 2014
TFRS 8 (revised 2012) Operating Segments 1 January 2014
Accounting Standard Interpretations:
TSIC 15 Operating Leases Incentives 1 January 2014 TSIC 27 Evaluating the Substance of Transactions
Involving the Legal Form of a Lease 1 January 2014
TSIC 29 Service Concession Arrangements: Disclosures
1 January 2014
TSIC 32 Intangible Assets Web Site Costs 1 January 2014
Financial Reporting Standard Interpretations:
TFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities
1 January 2014
TFRIC 4 Determining whether an Arrangement contains a Lease
1 January 2014
TFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
1 January 2014
TFRIC 7 Applying the Restatement Approach under TAS 29 Financial Reporting in Hyperinflationary Economies
1 January 2014
TFRIC 10 Interim Financial Reporting and Impairment 1 January 2014 TFRIC 12 Service Concession Arrangements 1 January 2014 TFRIC 13 Customer Loyalty Programmes 1 January 2014 TFRIC 17 Distributions of Noncash Assets to Owners 1 January 2014 TFRIC 18 Transfers of Assets from Customers 1 January 2014
The Company and its subsidiaries management believe that these accounting standards, financial reporting standard, accounting standard interpretations and financial reporting standards interpretations will not have any significant impact on the financial statements for the year when they are initially applied, except for the following financial reporting standards interpretations.
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TFRIC 13 Customer Loyalty Programmes
This TFRIC requires an entity to account for the award credits from customer loyalty programmes as a separate component of the sales transaction granting those award credits and allocate part of the fair value of the consideration received to the award credits and defer the recognition of revenue. The management of the Company expects the adoption of this TFRIC to have the effect of the reclassifications and had no effect to reported brought forward retained earnings for the year 2014.
4. Cumulative effect of the change in accounting policy due to the adoption of new accounting standard
During the current year, the Company and its subsidiaries made the change described in Note 3 to the financial statements to their significant accounting policies, as a result of the adoption of TAS 12 Income Taxes. The cumulative effect of the change in the accounting policy has been separately presented in the statement of changes in shareholders’ equity.
The amounts of adjustments affecting the statement of financial position and the statement of comprehensive income are summarised below.
(Unit: Thousand Baht) Consolidated financial statements Separate financial statements
31 December 2013
31 December 2012
1 January 2012
31 December 2013
31 December 2012
1 January 2012
Statement of financial position Increase in deferred tax
assets 86,523 67,376 80,805 8,991 67,376 80,805 Increase in unappropriated
retained earnings 86,523 67,376 80,805 8,991 67,376 80,805
(Unit: Thousand Baht) Consolidated financial statements Separate financial statements
For the year ended 31 December 2013
For the year ended 31 December 2012
For the year ended 31 December 2013
For the year ended 31 December 2012
Statement of comprehensive income Profit or loss: Increase (decrease) in income
tax expenses (19,147) 8,673 (8,991) 8,673 Increase (decrease) in profit
attributable to equity holders of the Company 19,147 (8,673) 8,991 (8,673)
Increase (decrease) in basic earnings per share (Baht) 0.0020 (0.0009) 0.0009 (0.0009)
Increase (decrease) in diluted earnings per share (Baht) 0.0020 (0.0009) 0.0009 (0.0009)
Other comprehensive income: Decrease in actuarial gain (4,756) (4,756)
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5. Significant accounting policies
5.1 Revenue recognition
Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting discounts and allowances.
Rental income is recognised proportionately over the term of lease period.
Service revenue is recognised when services have been rendered.
Interest income is recognised on an accrual basis based on the effective interest rate.
Dividends are recognised when the right to receive the dividends is established.
5.2 Cash and cash equivalents
Cash and cash equivalents consist of cash in hand and at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.
5.3 Trade accounts receivable
Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debt aging.
5.4 Inventories
Inventories are valued at the lower of cost (moving average cost method) and net realisable value.
Volume incentives received from the supplier are accounted for as a reduction of the value of inventories and recognised in profit or loss when the related inventories are sold.
5.5 Investments
Investments in subsidiaries are accounted for in the separated financial statements using the cost method.
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5.6 Investment properties
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and allowance for loss on impairment (if any).
Depreciation of investment properties is calculated by reference to their costs on the straightline basis over estimated useful lives of 5 30 years. Depreciation of the investment properties is included in determining income.
On disposal of investment properties, the difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period when the asset is derecognised.
5.7 Property, plant and equipment/Depreciation
Land is stated at cost. Buildings and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any).
Depreciation of buildings and equipment is calculated by reference to their costs, on the straightline basis over the following estimated useful lives:
Buildings 20 30 years Buildings on lease land and building improvement useful lives but not over lease periods Computer equipment 3 10 years Furniture, fixtures and office equipment 5 10 years Motor vehicles 5 years
Depreciation is included in determining income.
No depreciation is provided on land and assets under installation and under construction.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on disposal of an asset is included in the profit or loss when the asset is derecognised.
5.8 Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
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5.9 Intangible assets
Intangible assets are initially recognised at cost. Following the initial recognition, the intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses (if any).
Intangible assets (computer software) with finite lives are amortised on a systematic basis over the economic useful life (5 years and 10 years) and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method of such intangible assets are reviewed at least at each financial year end. The amortisation expense is charged to profit or loss.
5.10 Leasehold rights
Leasehold rights are stated at cost less accumulated amortisation and allowance for loss on impairment of assets (if any). The Company and its subsidiaries amortise leasehold rights on a straightline basis over the leasehold period.
The amortisation expense is charged to profit or loss.
5.11 Related party transactions
Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company.
They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors, and officers with authority in the planning and direction of the Company’s operations.
5.12 Longterm leases
Leases of property, plant or equipment which transfer substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in other longterm payables, while the interest element is charged to profit or loss over the lease period. The assets acquired under finance leases are depreciated over the useful life of the assets.
Leases of property, plant or equipment which do not transfer substantially all the risks and rewards of ownership are classified as operating leases. Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the lease term.
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5.13 Foreign currencies The consolidated and separate financial statements are presented in Baht, which is also the
Company’s functional currency. Items of each entity included in the consolidated financial statements are measured using the functional currency of that entity.
Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rates ruling at the end of reporting period.
Gains and losses on exchange are included in determining income.
5.14 Impairment of assets
At the end of each reporting period, the Company and its subsidiaries perform impairment reviews in respect of the property, plant and equipment, investment properties, and other intangible assets whenever events or changes in circumstances indicate that an asset may be impaired. An impairment loss is recognised when the recoverable amount of an asset, which is the higher of the asset’s fair value less costs to sell and its value in use, is less than the carrying amount. In determining value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by a valuation model that, based on information available, reflects the amount that the Company and its subsidiaries could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal.
An impairment loss is recognised in profit or loss.
In the assessment of asset impairment if there is any indication that previously recognised impairment losses may no longer exist or may have decreased, the Company and its subsidiaries estimate the asset’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The increased carrying amount of the asset attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss.
5.15 Employee benefits
Salaries, wages, bonuses and contributions to the social security fund are recognised as expenses when incurred.
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The Company has established an Employee Joint Investment Program (EJIP). The program is monthly contributed by eligible employees and by the Company to EJIP participant. The details of the program are as described in Note 24 to the financial statements. The Company’s contributions are recognised as expenses when incurred.
The Company and its subsidiaries, and their employees have jointly established a provident fund. The fund is monthly contributed by employees and by the Company and its subsidiaries. The fund’s assets are held in a separate trust fund and the Company and its subsidiaries’ contributions are recognised as expenses when incurred.
The Company and its subsidiaries have obligations in respect of the severance payments it must make to employees upon retirement under labor law. The Company and its subsidiaries treat these severance payment obligations as a defined benefit plan.
The obligation under the defined benefit plan is determined by a professionally qualified independent actuary based on actuarial techniques, using the projected unit credit method.
Actuarial gains and losses arising from postemployment benefits are recognised immediately in other comprehensive income.
5.16 Provisions
Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
5.17 Income tax
Income tax expense represents the sum of corporate income tax currently payable and deferred tax.
Current tax
Current income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation.
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Deferred tax
Deferred income tax is provided on temporary differences between the tax bases of assets and liabilities and their carrying amounts at the end of each reporting period, using the tax rates enacted at the end of the reporting period.
The Company and its subsidiaries recognise deferred tax liabilities for all taxable temporary differences while they recognise deferred tax assets for all deductible temporary differences and tax losses carried forward to the extent that it is probable that future taxable profit will be available against which such deductible temporary differences and tax losses carried forward can be utilised.
At each reporting date, the Company and its subsidiaries review and reduce the carrying amount of deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
The Company and its subsidiaries record deferred tax directly to shareholders' equity if the tax relates to items that are recorded directly to shareholders' equity.
6. Significant accounting judgements and estimates
The preparation of financial statements in conformity with Thai Financial Reporting Standards at times requires management to make subjective judgements and estimates regarding matters that are inherently uncertain. These judgements and estimates affect reported amounts and disclosures; and actual results could differ from these estimates. Significant judgements and estimates are as follows:
Recognition and derecognition of assets and liabilities
In considering whether to recognise or to derecognise assets or liabilities, the management is required to make judgement on whether significant risk and rewards of those assets or liabilities have been transferred, based on their best knowledge of the current events and arrangements.
Leases
In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgement regarding whether significant risk and rewards of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement.
Allowance for damaged goods
In determining an allowance for damaged goods due to loss or deterioration, the management needs to exercise judgement in making estimates based upon the condition of goods and the duration such goods have remained in stock.
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Allowance for doubtful accounts
In determining an allowance for doubtful accounts, the management needs to make judgement and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition.
Fair value of financial instruments
In determining the fair value of financial instruments that are not actively traded and for which quoted market prices are not readily available, the management exercise judgement, using a variety of valuation techniques and models. The input to these models is taken from observable markets, and includes consideration of liquidity, correlation and longerterm volatility of financial instruments.
Investment properties/Depreciation
In determining depreciation of investment properties, the management is required to make estimates of the useful lives and salvage values of the Company’s investment properties and to review estimate useful lives and salvage values when there are any changes.
In addition, the management is required to review investment properties for impairment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying cost. This requires judgements regarding forecast of future revenues and expenses relating to the assets subject to the review.
Property plant and equipment/Depreciation
In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and salvage values of the Company and its subsidiaries’ plant and equipment and to review estimate useful lives and salvage values when there are any changes.
In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying cost. This requires judgements regarding forecast of future revenues and expenses relating to the assets subject to the review.
Deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit will be available against which the temporary differences and losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of estimate future taxable profits.
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Postemployment benefits under defined benefit plans
The obligation under the defined benefit plan is determined based on actuarial techniques. Such determination is made based on various assumptions, including discount rate, future salary increase rate, mortality rate and staff turnover rate.
7. Related party transactions
During the years, the Company and its subsidiaries had significant business transactions with related parties. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and its subsidiaries and those related parties.
(Unit: Thousand Baht)
Consolidated Separate financial statements financial statements Pricing policy 2013 2012 2013 2012
Transactions with subsidiary companies (eliminated from the consolidated financial statements) Sales income 36,927 1,883 Actual cost plus margin Rental and service income 159,487 156,661 Baht 1 14 million per month
(2012: Baht 13 million per month) Management service income 32,776 29,423 Actual cost and contact price Dividend received 39,994 As declared Service income 10,617 9,966 Actual cost Service expense 148,691 493 Actual cost and contact price Interest income 5,759 4.50% per annum Interest expenses 2,568 2,989 2.75% 3.00% per annum
(2012: 3.00% 3.50% per annum) Transactions with related companies Sales income 47,687 64,676 47,687 64,676 Market price Rental and service income 5,566 2,402 5,566 2,402 Contact price Interest income 12,637 20,970 12,637 20,970 1.00% 2.50% per annum
(2012: 1.00% 3.25% per annum) Rental and service expenses 20,282 19,418 20,282 19,418 Percentage of revenue but not less
than a minimum rate
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As at 31 December 2013 and 2012, the Company had the outstanding balances with related parties which had been included in the following accounts:
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Bill of exchanges and deposits with financial institution (included in cash and cash equivalents) Related company(1) 64,619 819,161 64,619 819,161 Trade and other receivables Subsidiaries 138,576 5,513 Related company(1) 378 39 378 39 Related company(2) 8,223 5,252 8,223 5,252 Total 8,601 5,291 147,177 10,804
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Shortterm loan to related party Subsidiary 654,000 Rental guarantee deposits Related company(1) 3,000 3,000 3,000 3,000 Trade and other payables (Note 17) Subsidiaries 41,657 12 Related company(1) 1,581 1,124 1,581 1,124 Total 1,581 1,124 43,238 1,136 Shortterm loan from related party Subsidiary 90,000 90,000
Relationship with the related companies
(1) has common major shareholders
(2) the major shareholders
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Shortterm loan to related party
The Company has granted unsecured loan of Baht 654 million to its subsidiary on which interest is payable on a monthly basis at a rate of 4.50% per annum. The loan is repayable at call. Movement in the balance of the loan during the year was as follow:
(Unit: Thousand Baht)
Separate financial statements Balance as at During the year Balance as at 1 January 2013 Increase Decrease 31 December 2013 Shortterm loan to related party Mega Home Center Company Limited 654,000 654,000
Shortterm loan from related party
The Company has received unsecured loan of Baht 90 million from its subsidiary on which interest is payable on a monthly basis at a rate of 2.75% 3.00% per annum (2012: 3.00% 3.50% per annum). The loan is repayable at call. Movement in the balance of the loan during the year was as follow:
(Unit: Thousand Baht)
Separate financial statements Balance as at During the year Balance as at 1 January 2013 Increase Decrease 31 December 2013 Shortterm loan from related party Market Village Company Limited 90,000 40,000 (40,000) 90,000
Directors and management’s benefits
During the year ended 31 December 2013 and 2012, the Company and its subsidiaries had employee benefit expenses payable to their directors and management as below.
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Shortterm benefits 90,380 98,715 90,380 98,715 Postemployment benefits 1,721 3,540 1,721 3,540 Total 92,101 102,255 92,101 102,255
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8. Cash and cash equivalents
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Cash 250,765 207,571 , 206,802 Bank deposits 556,694 266,048 , 204,085 Bills of exchange 817,000 817,000 Total 807,459 1,290,619 , 1,227,887
As at 31 December 2013, bank deposits in saving accounts and bills of exchange carried interests between 0.75% and 2.50% per annum (2012: between 0.62% and 3.25% per annum).
9. Trade and other receivables
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012
Trade accounts receivable 329,655 312,722 363,968 305,495 Other receivables 1,059,279 915,746 1,029,042 920,988 Income receivables 21,849 23,152 16,112 17,326
Total trade and other receivables 1,410,783 1,251,620 1,409,122 1,243,809
Trade accounts receivable
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Trade accounts receivable 175,054 164,946 210,302 158,070 Check returned receivable 690 930 690 930 Credit card and coupon receivable 155,253 148,188 154,318 147,837 Total 330,997 314,064 365,310 306,837 Less: Allowance for doubtful accounts (1,342) (1,342) (1,342) (1,342) Total trade accounts receivable net 329,655 312,722 363,968 305,495
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The outstanding balances of trade accounts receivable as at 31 December 2013 and 2012 are aged as follows:
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Trade receivables related parties Not yet due 660 3,919 2,580 4,061 Past due
Up to 3 months 1,309 1,333 5,245 1,475 3 6 months 69 , 6 12 months 24
Total trade receivables related parties 2,062 5,252 , 5,536 Trade receivables unrelated parties Not yet due 320,305 297,416 319,270 293,418 Past due
Up to 3 months 7,088 10,178 7,099 6,690 3 6 months 6 12 months 668 652 Over 12 months 874 1,218 874 1,193
Total 328,935 308,812 327,895 301,301 Less: Allowance for doubtful debts (1,342) (1,342) (1,342) (1,342) Total trade receivables unrelated
parties, net 327,593 307,470 326,553 299,959 Total trade receivables net 329,655 312,722 363,968 305,495
Other receivables
Other receivables mainly consist of receivables from sale support operation and area rental and related service receivables.
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The outstanding balances of other receivables as at 31 December 2013 and 2012 are aged as follows:
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Age of receivables Not yet due , 527,96 561,108 533,198 Past due
Up to 3 months , 374,538 457,519 374,538 3 6 months , 738 6,614 738 6 12 months , 6,398 2,920 6,398 Over 12 months , 8,09 2,856 8,091
Total 1,061,254 917,7 1,031,017 922,963 Less: Allowance for doubtful debts (1,975) (1,975) (1,975) (1,975) Total other receivables net 1,059,279 915,746 1,029,042 90,988
10. Inventories
(Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Inventories 8,080,665 6,581,458 7,501,667 6,581,458 Less: Reduce cost to net realisable value (309,886) (243,527) (309,316) (243,527) Net 7,770,779 6,337,931 7,192,351 6,337,931 Less: Inventories repaid its cost when sold (1,059,235) (807,888) (1,015,260) (807,888) Purchase discount (205,905) (177,505) (201,505) (177,505) Inventories net 6,505,639 5,352,538 5,975,586 5,352,538
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11. Investments in subsidiaries
Details of investments in subsidiaries as presented in separate financial statements are as follows: (Unit: Thousand Baht)
Shareholding Dividend received Paidup capital percentage Cost during the year
Company’s name 2013 2012 2013 2012 2013 2012 2013 2012 (Percent) (Percent) Market Village Company Limited 5,000 5,000 99.99 99.99 4,999 4,999 39,994 Home Product Center (Malaysia) Sdn. Bhd. 30,000 10,000 100.00 100.00 29,800 9,840 Mega Home Center Company Limited 500,000 1,000 99.99 500,000 DC Service Center Company Limited 1,250 99.99 1,250 536,049 14,839 39,994
During the current year, the significant changes in investments in subsidiaries are as follows.
Home Product Center (Malaysia) Sdn. Bhd.
In September 2013, the Board of Directors of the Company passed a resolution approving additional investment in Home Product Center (Malaysia) Sdn. Bhd. The Company made payment for the additional shares at MYR 2 million (approximately Baht 19.96 million) in October 2013. As a result of the above, the Company’s proportionate holding in the equity of such subsidiary did not change.
Mega Home Center Company Limited
Mega Home Center Company Limited was incorporated on 4 July 2012 with an initial registered share capital of Baht 1 million. On 25 December 2012, the Company's Board of Directors meeting passed a resolution approving the acquisition of such company to operate retail business. The Company made payment for the investment on 1 January 2013, 99.99% of which is to be held by the Company and it is thus treated as a subsidiary.
During the year 2013, the subsidiary several times increased its registered capital which rose from the previous registered capital of Baht 1 million to Baht 500 million, and as at 31 December 2013, the subsidiary had issued and paidup share capital amounting to Baht 500 million. The Company paid all subscription already in the current year.
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DC Service Center Company Limited
On 27 August 2013, the Company's Board of Directors meeting passed a resolution approving the acquisition of DC Service Center Company Limited. Such company was incorporated on 4 September 2013 with a registered share capital of Baht 5 million, and paidup share capital of Baht 1.25 million to operate the services of distribution of goods, delivery and installation. The Company made payment for the investment on 4 September 2013, 99.99% of which is to be held by the Company and it is thus treated as a subsidiary.
12. Investment properties
The net book value of investment properties as at 31 December 2013 and 2012 is presented below.
(Unit: Thousand Baht) Consolidated and separate financial statements
Land and land improvement
Office building for rent
Assets under installation and under
construction
Total 31 December 2013 Cost 150,000 1,367,750 620,076 2,137,826 Less: Accumulated depreciation (585,566) (585,566) Net book value 150,000 782,184 620,076 1,552,260 31 December 2012 Cost 150,000 1,358,127 372,674 1,880,801 Less: Accumulated depreciation (504,531) (504,531) Net book value 150,000 853,596 372,674 1,376,270
A reconciliation of the net book value of investment properties for the years 2013 and 2012 is presented below.
(Unit: Thousand Baht)
Consolidated and separate financial statements
2013 2012
Net book value at beginning of year 1,376,270 1,095,983 Acquisition of assets 260,117 362,124 Disposals net book value (1,699) (170) Depreciation charged (82,428) (81,667)
Net book value at end of year 1,552,260 1,376,270
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As at 31 December 2013, the fair value of the investment properties is Baht 2,925 million, which was determined in the year 2013 by an accredited independent valuer using the following approach:
Land has been determined using the market approach with adjustments to reflect changes in location and condition.
Building and building improvement have been determined using the depreciated replacement cost approach.
As at 31 December 2012, the fair value of the investment properties is Baht 2,332 million, which was determined in the year 2011 by an accredited independent valuer using the following approach:
Land has been determined using the market approach with adjustments to reflect changes in location and condition.
Building and building improvement have been determined using the income approach. The main assumptions used in the valuation are yield rate, building improvement rate and longterm growth in real rental rates.
13. Property, plant and equipment (Unit: Thousand Baht)
Consolidated financial statements
Land and land
Buildings and building Computer
Furniture, fixtures and
office Motor
Assets under installation and under
improvement improvement equipment equipment vehicles construction Total Cost: 1 January 2012 3,188,659 7,139,716 383,492 2,828,766 55,597 1,481,227 15,077,457 Additions 1,347,329 133,848 50,149 575,038 36,573 2,993,966 5,136,903 Disposals and writtenoff (13,037) (3,436) (83,710) (16,405) (116,588)
Transfers in (out) 61,298 670,808 470 325,922 10 (1,058,508) 31 December 2012 4,597,286 7,931,335 430,675 3,646,016 75,775 3,416,685 20,097,772 Additions 2,854,377 272,312 74,306 638,356 7,000 6,090,825 9,937,176 Disposals and writtenoff (31,422) (72,728) (127,420) (10,350) (241,920)
Transfers in (out) 64,995 2,279,259 2,170 503,887 (2,850,311) 31 December 2013 7,516,658 10,451,484 434,423 4,660,839 72,425 6,657,199 29,793,028 Accumulated depreciation: 1 January 2012 2,102,976 307,460 1,762,530 28,842 4,201,808 Depreciation for the year 597,725 50,214 435,482 11,049 1,094,470 Depreciation on disposals and writtenoff (5,659) (3,388) (71,976) (14,719) (95,742) 31 December 2012 2,695,042 354,286 2,126,036 25,172 5,200,536 Depreciation for the year 831,849 61,409 581,751 13,250 1,488,259 Depreciation on disposals and writtenoff (14,501) (72,369) (112,685) (8,774) (208,599) 31 December 2013 3,512,390 343,056 2,595,102 29,648 6,480,196
ANNUAL REPORT 2013130
(Unit: Thousand Baht)
Consolidated financial statements
Land and land
Buildings and building Computer
Furniture, fixtures and
office Motor
Assets under installation and under
improvement improvement equipment equipment vehicles construction Total Allowance for impairment loss: 1 January 2012 13,000 50,263 63,263 Increase during the year 18,820 18,820 Decrease during the year (3,570) (27,835) (31,405) 31 December 2012 9,430 41,248 50,678 Increase during the year 65,740 65,740 Decrease during the year (38,580) (38,580) 31 December 2013 , 68,408 , Net book value: 31 December 2012 4,587,856 5,195,045 76,389 1,519,980 50,603 3,416,685 14,846,558 31 December 2013 7,507,228 6,870,686 91,367 2,065,737 42,777 6,657,199 23,234,994 Depreciation for the year
2012 (Baht 1,056 million included in selling expenses, and the balance in administrative expenses) 1,094,470 2013 (Baht 1,448 million included in selling expenses, and the balance in administrative expenses) 1,488,259
(Unit: Thousand Baht) Separate financial statements
Land and
land Buildings and
building Computer
Furniture, fixtures and
office Motor
Assets under installation and under
improvement improvement equipment equipment vehicles construction Total Cost: 1 January 2012 3,188,659 7,139,070 383,121 2,808,995 55,000 1,481,226 15,056,071 Additions 1,347,329 133,848 50,063 574,216 35,795 2,993,966 5,135,217 Disposals and writtenoff (13,037) (3,436) (83,353) (15,845) (115,671)
Transfers in (out) 61,298 670,808 470 325,922 10 (1,058,508) 31 December 2012 4,597,286 7,930,689 430,218 3,625,780 74,960 3,416,684 20,075,617 Additions 2,854,377 160,213 67,007 553,942 6,999 4,933,756 8,576,294 Disposals and writtenoff (31,422) (72,661) (127,206) (10,312) (241,601)
Transfers in (out) 64,995 2,254,046 485,769 (2,804,810) 31 December 2013 7,516,658 10,313,526 424,564 4,538,285 71,647 5,545,630 28,410,310 Accumulated depreciation: 1 January 2012 2,102,692 307,153 1,745,358 28,247 4,183,450 Depreciation for the year 597,661 50,163 434,126 11,002 1,092,952 Depreciation on disposals and writtenoff (5,659) (3,388) (71,620) (14,160) (94,827) 31 December 2012 2,694,694 353,928 2,107,864 25,089 5,181,575 Depreciation for the year 823,589 60,425 572,675 13,094 1,469,783 Depreciation on disposals and writtenoff (14,501) (72,572) (112,473) (8,736) (208,282) 31 December 2013 3,503,782 341,781 2,568,066 29,447 6,443,076
HOME PRODUCT CENTER PCL. 131
(Unit: Thousand Baht) Separate financial statements
Land and
land Buildings and
building Computer
Furniture, fixtures and
office Motor
Assets under installation and under
improvement improvement equipment equipment vehicles construction Total Allowance for impairment loss: 1 January 2012 13,000 50,263 63,263 Increase during the year 18,820 18,820 Decrease during the year (3,570) (27,835) (31,405) 31 December 2012 9,430 41,248 50,678 Increase during the year 65,740 65,740 Decrease during the year (38,580) (38,580) 31 December 2013 9,430 68,408 77,838 Net book value: 31 December 2012 4,587,856 5,194,747 76,290 1,517,916 49,871 3,416,684 14,843,364 31 December 2013 7,507,288 6,741,336 82,783 1,970,219 42,200 5,545,630 21,889,396 Depreciation for the year
2012 (Baht 1,056 million included in selling expenses, and the balance in administrative expenses) 1,092,952 2013 (Baht 1,430 million included in selling expenses, and the balance in administrative expenses) 1,469,783
As at 31 December 2013, the Company and its subsidiaries had vehicles and equipment under finance lease agreements with net book values amounting to Baht 32 million (2012: Baht 21 million) (The separate financial statements: Baht 25 million, 2012: Baht 21 million).
As at 31 December 2013, certain plant and equipment items have been fully depreciated but are still in use. The gross carrying amount (before deducting accumulated depreciation) of those assets amounted to approximately Baht 1,791 million (2012: Baht 1,585 million) (The separate financial statements: Baht 1,774 million, 2012: Baht 1,569 million).
ANNUAL REPORT 2013132
14. Computer software (Unit: Thousand Baht)
Consolidated financial
statements
Separate financial
statements Cost 1 January 2012 363,091 362,743 Acquisitions during the year 24,193 24,193 Writtenoff during the year (108,658) (108,658) 31 December 2012 278,626 278,278 Acquisitions during the year 73,920 29,024 31 December 2013 352,546 307,302 Accumulated amortisation 1 January 2012 135,043 134,993 Amortisation for the year 29,728 29,3 Amortisation on writtenoff (84,474) (84,474) 31 December 2012 80,297 80,212 Amortisation for the year 30,677 29,167 31 December 2013 110,974 109,379 Allowance for impairment loss 1 January 2012 38,500 38,500 Decrease during the year (30,000) (30,000) 31 December 2012 8,500 8,500 Decrease during the year (8,500) (8,500) 31 December 2013 Net book value 31 December 2012 189,829 189,566 31 December 2013 241,572 197,923
HOME PRODUCT CENTER PCL. 133
15. Leasehold rights (Unit: Thousand Baht)
Consolidated financial statements
Separate financial statements
Cost 1 January 2012 1,299,513 1,299,513 Acquisitions during the year 164,676 164,676
31 December 2012 1,464,189 1,464,189 Acquisitions during the year 399,752 329,752
31 December 2013 1,863,941 1,793,941
Accumulated amortisation 1 January 2012 240,117 240,117 Amortisation for the year 43,413 43,413
31 December 2012 283,530 283,530 Amortisation for the year 48,011 48,011
31 December 2013 331,541 331,541
Net book value 31 December 2012 1,180,659 1,180,659
31 December 2013 1,532,400 1,462,400
16. Bank overdrafts and shortterm loans from financial institutions
(Unit: Thousand Baht)
Interest rate
Consolidated and separate financial statements
(% per annum) 2013 2012
Shortterm loans from financial institutions 2.45 2.90 1,360,000
As at 31 December 2013, the Company had unsecured bills of exchange totaling Baht 1,360 million. The loan Baht 1,000 million is due in February 2014 and March 2014, at Baht 500 million for each period. The loan Baht 360 million is due at call.
As at 31 December 2013 and 2012, the Company had overdraft lines from banks totaling Baht 290 million and Baht 275 million, respectively, and other credit facilities amounting to Baht 7,571 million and Baht 5,466 million, respectively.
ANNUAL REPORT 2013134
17. Trade and other payables (Unit: Thousand Baht) Consolidated financial
statements Separate financial
statements 2013 2012 2013 2012 Trade payables unrelated parties 8,644,179 6,698,340 7,975,555 6,691,754 Other payables related parties 41,657 12 Other payables unrelated parties 287,713 416,907 363,770 404,216 Other payables for purchase of assets 1,166,381 301,694 909,672 301,694 Accrued expenses related parties 1,581 1,124 1,581 1,124 Accrued expenses unrelated parties 956,861 673,267 771,986 656,042 Total trade and other payables 11,056,715 ,, 10,064,221 8,054,842
18. Liabilities under financial lease agreements (Unit: Thousand Baht) Consolidated financial statements Portion due within one year Portion due over one year 2013 2012 2013 2012 Liabilities under financial lease
agreements 9,925 7,192 20,607 18,541 Less: Deferred interest expense (1,849) (1,225) (1,594) (1,717) Net 8,076 5,967 19,013 16,824
(Unit: Thousand Baht) Separate financial statements Portion due within one year Portion due over one year 2013 2012 2013 2012 Liabilities under financial lease
agreements 5,871 7,192 12,670 18,541 Less: Deferred interest expense (880) (1,225) (777) (1,717) Net 4,991 5,967 11,893 16,824
The Company and its subsidiaries have entered into the finance lease agreements with leasing companies for rental of motor vehicles and equipment for use in their operation, whereby it is committed to pay rental on a monthly basis. The terms of the agreements are generally between 3 to 5 years.
HOME PRODUCT CENTER PCL. 135
Future minimum lease payments required under the finance lease agreements were as follows:
(Unit: Thousand Baht)
Consolidated financial statements
31 December 2013
Less than 1 year 1 5 years Total
Future minimum lease payments 9,925 20,607 30,532 Deferred interest expenses (1,849) (1,594) (3,443)
Present value of future minimum lease payments 8,076 19,013 27,089
(Unit: Thousand Baht)
Separate financial statements
31 December 2013
Less than 1 year 1 5 years Total
Future minimum lease payments 5,871 12,670 18,541 Deferred interest expenses (880) (777) (1,657)
Present value of future minimum lease payments 4,991 11,893 16,884
(Unit: Thousand Baht)
Consolidated and separate financial statements 31 December 2012 Less than 1 year 1 5 years Total
Future minimum lease payments 7,192 18,541 25,733 Deferred interest expenses (1,225) (1,717) (2,942) Present value of future minimum
lease payments 5,967 16,824 22,791
ANNUAL REPORT 2013136
19. Longterm loans (Unit: Thousand Baht)
Interest rate Consolidated and separate (% per financial statements
Loan annum) Repayment schedule 2013 2012 1 3.70 Payment of interest is scheduled on a
quarterly basis, starting from 3 months after the first draw down of principal.
Payment of principal is scheduled in installments, every 6 months starting from 6 months after first principal draw down. Full repayment is to be made within 10 installments or within 60 months after first principal draw down. 1,200,000 1,500,000
2 3.71 Payment of interest is scheduled on a quarterly basis, starting from 3 months after the first draw down of principal.
Payment of principal is scheduled in installments, every 6 months starting from 6 months after first principal draw down. Full repayment is to be made within 10 installments or within 60 months after first principal draw down. 900,000
Total 2,100,000 1,500,000 Less: Current portion of longterm loans (500,000) (300,000) Longterm loans net of current portion 1,600,000 1,200,000
The Company has received unsecured longterm credit facilities from a financial institution. The loan agreements contain covenants as specified in the agreements that, among other things, require the Company to maintain certain debt to equity ratio according to the agreements.
HOME PRODUCT CENTER PCL. 137
20. Provision for longterm employee benefits
Provision for longterm employee benefits, which is compensations on employees’ retirement, was as follows: (Unit: Thousand Baht) Consolidated financial
statements Separate financial
statements 2013 2012 2013 2012 Defined benefit obligation at beginning of
year
80,958
91,352
80,958
91,352 Current service cost 10,700 9,854 7,838 9,854 Interest cost 3,646 3,533 2,671 3,533 Benefits paid during the year (3,429) (3,429) Actuarial gain (23,781) (23,781) Defined benefit obligation at end of year 91,875 80,958 88,038 80,958
Longterm employee benefit expenses included in the profit or loss was as follows: (Unit: Thousand Baht) Consolidated financial
statements Separate financial
statements 2013 2012 2013 2012 Current service cost 10,700 9,854 7,838 9,854 Interest cost Actuarial gain 3,646 3,533 2,671 3,533 Total expense recognised in profit or loss 14,346 13,387 10,509 13,387 Line item under which such expenses
are included in profit or loss
Selling and administrative expenses 14,346 13,387 10,509 13,387
The cumulative amount of actuarial gain (net of income tax) recognised in other comprehensive income and taken as part of retained earnings of the Company and its subsidiaries as at 31 December 2013 amounted to Baht 19 million (2012: Baht 19 million) (The Company only: Baht 19 million, 2012: Baht 19 million).
ANNUAL REPORT 2013138
Principal actuarial assumptions at the valuation date were as follows:
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Discount rate 4.0% 4.0% 4.0% 4.0% Future salary increase rate (depending on age) 6.0% 6.5% 6.0% 6.5% 6.0% 6.5% 6.0% 6.5% Staff turnover rate (depending on age) 0 50% 0 50% 0 50% 0 50%
Amounts of defined benefit obligation and experience adjustments on the obligation for the current and previous four years are as follows: (Unit: Thousand Baht)
Defined benefit obligation Experience adjustments
on the obligation Consolidated
financial statements
Separate financial
statements
Consolidated financial
statements
Separate financial
statements Year 2013 91,875 88,038 Year 2012 80,958 80,958 57,711 57,711 Year 2011 91,352 91,352 Year 2010 76,786 76,786 Year 2009 63,516 63,516
21. Debentures
Consolidated and separate financial statements Number of debentures (Unit) Amount (Thousand Baht) 2013 2012 2013 2012 Unsecured debentures
# 1/2010 700,000 700,000 # 2/2010 1,000,000 1,000,000 # 1/2011 1,000,000 1,000,000 1,000,000 1,000,000 # 1/2012 1,300,000 1,300,000 1,300,000 1,300,000 # 1/2013 4,000,000 4,000,000
Total 6,300,000 4,000,000 6,300,000 4,000,000
Less: Current portion (1,700,000) Debentures net of current portion 6,300,000 2,300,000
HOME PRODUCT CENTER PCL. 139
Details of the Company’s debentures are as follows:
1. The Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 1/2010 due 2013
Name of debentures “The Unsubordinated and Unsecured Debentures of Home
Product Center Plc. No. 1/2010 due 2013”
Amount Baht 700 million Term 3 years, starting from date of issuance Issued date 8 January 2010 Interest rate 3.65% per annum Interest payment schedule Quarterly in January, April, July and October, starting from
8 April 2010 and with the last payment due on 8 January 2013
Principal repayment On the redemption date of 8 January 2013 Covenants Maintenance of debt to equity ratio and restriction on
dividend payment
On 8 January 2013, the Company repaid the principal of the Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 1/2010 in full at Baht 700 million to the debenture holders, as stipulated in the terms of repayment of such debentures.
2. The Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 2/2010 due 2013
Name of debentures “The Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 2/2010 due 2013”
Amount Baht 1,000 million Term 3 years, starting from date of issuance Issued date 25 June 2010 Interest rate 3.00% per annum Interest payment schedule Semiannually in June and December, starting from 25
December 2010 and with the last payment due on 25 June 2013
Principal repayment On the redemption date of 25 June 2013 Covenants Maintenance of debt to equity ratio and restriction on
dividend payment
ANNUAL REPORT 2013140
On 25 June 2013, the Company repaid the principal of The Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 2/2010 in full at Baht 1,000 million to the debenture holders, as stipulated in the terms of repayment of such debentures.
3. The Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 1/2011 due
2015.
Name of debentures “The Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 1/2011 due 2015”
Amount Baht 1,000 million Term 4 years, starting from date of issuance Issued date 15 September 2011 Interest rate 4.60% per annum Interest payment schedule Quarterly in March, June, September and December,
starting from 15 December 2011 Principal repayment On the redemption date of 15 September 2015 Covenants Maintenance of debt to equity ratio, restriction on dividend
payment and disposal and transfer of assets
4. The Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 1/2012 due
2015.
Name of debentures “The Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 1/2012 due 2015”
Amount Baht 1,300 million Term 3 years, starting from date of issuance Issued date 14 September 2012 Interest rate 3.85% per annum Interest payment schedule Semiannually in March and September, starting from 14
March 2013 Principal repayment On the redemption date of 14 September 2015 Covenants Maintenance of debt to equity ratio, restriction on dividend
payment and disposal and transfer of assets
HOME PRODUCT CENTER PCL. 141
5. The Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 1/2013 due 2016.
Name of debentures “The Unsubordinated and Unsecured Debentures of Home Product Center Plc. No. 1/2013 due 2016”
Amount Baht 4,000 million Term 3 years, starting from date of issuance Issued date 18 September 2013 Interest rate 4.05% per annum Interest payment schedule Semiannually in March and September, starting from 18
March 2014 Principal repayment On the redemption date of 18 September 2016 Covenants Maintenance of debt to equity ratio, restriction on dividend
payment and disposal and transfer of assets
22. Share capital
As discussed in Note 23 to the financial statements, during the current year, the holders of the warrants of the Company exercised the warrants as follows:
2013 Warrants Ordinary shares Exercise price Amount
(Unit) (Shares) (Baht/share) (Baht)
ESOPW4 The first quarter 743,578 2,702,904 1.095 2,959,684 The second quarter 446,821 1,894,965 1.000 1,894,965
Total 1,190,399 4,597,869 4,854,649
As at 31 December 2013, the warrants allotted to employees of the Company (ESOPW4) is fully exercised.
ANNUAL REPORT 2013142
Movements in the number of ordinary shares, the paidup share capital and premium on ordinary shares are as follows:
Number of ordinary
shares Paidup
share capital Premium on
ordinary shares (Thousand Shares) (Thousand Baht) (Thousand Baht)
Registered share capital At the beginning of the year 7,054,971 Increase during the year 2,544,820 Decrease during the year (9,943) At the end of the year 9,589,848
Issued and paidup share capital At the beginning of the year 7,041,430 7,041,430 , Increase in capital from exercising of the rights of the warrants 4,598 4,598 257 Increase in capital from
payment of stock dividends 2,543,523 2,543,523 At the end of the year 9,589,551 9,589,551 646,323
On 5 April 2013, the Annual General Meeting of the Company's shareholders passed the resolutions in relation to the Company’s share capital as follows:
1. To decrease the registered capital of the Company from Baht 7,054.97 million to Baht 7,053.58 million by cancelling the registered ordinary shares remaining after the stock dividend allocation of 1.39 million ordinary shares with a par value of Baht 1 each, previously made in accordance with the resolution of the Extraordinary General Shareholders Meeting no. 1/2555.
On 19 April 2013, the Company registered with the Ministry of Commerce the decrease in its registered capital to Baht 7,053.58 million, and paidup share capital at Baht 7,044.13 million
2. Paid dividend by the Company’s ordinary shares in the ratio of 6 existing shares per 1 dividend share, not exceeding 1,174.61 million shares, or in the total amount not exceeding Baht 1,174.61 million or shall be converted as dividend payment at Baht 0.1667 per share. In case that any shareholder holds the indivisible share remaining after such allocation, the dividend shall be paid by cash in the amount of Baht 0.1667 per share.
3. To increase the registered capital from the previous registered capital of Baht 7,053.58 million to be the new registered capital of Baht 8,228.19 million by issuing an additional 1,174.61 million ordinary shares at the par value of Baht 1 each to support the payment of a stock dividend.
HOME PRODUCT CENTER PCL. 143
On 26 April 2013, the Company reports to the Stock Exchange of Thailand (SET) the number of 1,173.61 million ordinary shares actually allocated to the stock dividend.
On 30 April 2013, the Company registered with the Ministry of Commerce the increase in its registered capital to Baht 8,228.19 million, and paidup share capital at Baht 8,217.74 million.
On 22 October 2013, the Extraordinary General Meeting of the Company's shareholders passed the following resolutions:
1. To decrease the registered capital of the Company from the previous registered capital of Baht 8,228.19 million to Baht 8,219.64 million by cancelling the registered ordinary shares remaining after the stock dividend allocation of 1.00 million ordinary shares, previously made in accordance with the resolution of the Annual General Shareholders Meeting of the year 2013, and remaining from exercise of the rights of conversation from the warrants issued to employees of the Company (ESOPW4) total of 7.55 million ordinary shares, by way of eliminating the 8.55 million ordinary shares with par value Baht 1 each.
On 7 November 2013, the Company registered with the Ministry of Commerce the decrease in its registered capital to Baht 8,219.64 million, and paidup share capital at Baht 8,219.64 million
2. Paid dividend by the Company’s ordinary shares in the ratio of 6 existing shares per 1 dividend share, not exceeding 1,370.21 million shares, or in the total amount not exceeding Baht 1,370.21 million or shall be converted as dividend payment at Baht 0.1667 per share. In case that any shareholder holds the indivisible share remaining after such allocation, the dividend shall be paid by cash in the amount of Baht 0.1667 per share.
3. To increase the registered capital from Baht 8,219.64 million to be Baht 9,589.85 million by issuing an additional 1,370.21 million ordinary shares at the par value of Baht 1 each to support the payment of a stock dividend.
On 8 November 2013 the Company reports to the Stock Exchange of Thailand (SET) the number of 1,369.91 million ordinary shares actually allocated to the stock dividend.
On 11 November 2013, the Company registered with the Ministry of Commerce the increase in its registered capital to Baht 9,589.85 million, and paidup share capital at Baht 9,589.55 million.
ANNUAL REPORT 2013144
23. Warrants
Details of the warrants of the Company which were issued without charge, are as follows:
Type of Issuance date Number of Period of Exercise price Exercise ratio warrant Issue to of warrant warrants issued warrant per share per 1 warrant
(Units) ESOPW4 Directors and employees of
the Company and its subsidiary
23 May 2008 50,000,000 5 years Baht 3.98 1 ordinary shares
During the period of exercise the rights of the warrants allotted to employees of the Company (ESOPW4), the Company paid cash dividend and stock dividend as a result the Company needs to adjust the rights of the warrants allotted to employees of the Company (ESOPW4) in accordance with the prospectus for the offering of warrants in respect of the condition to adjust the rights of warrants and the changes in prices as follows:
Effective date Exercise price per share Exercise ratio per 1 warrant
16 April 2009 Baht 3.912 1.017 ordinary shares 12 October 2009 Baht 2.059 1.932 ordinary shares 12 April 2010 Baht 2.044 1.946 ordinary shares 12 October 2010 Baht 1.752 2.271 ordinary shares 12 April 2011 Baht 1.502 2.650 ordinary shares 7 October 2011 Baht 1.314 3.029 ordinary shares 12 October 2012 Baht 1.095 3.635 ordinary shares 12 April 2013 Baht 1.000 4.241 ordinary shares
During the year, the movements of warrants of the Company are as follows:
(Unit: Unit)
Number of warrants Number of Number of warrants Type of outstanding as at warrants exercised outstanding as at warrant 31 December 2012 during the year 31 December 2013
ESOPW4 1,190,399 (1,190,399)
HOME PRODUCT CENTER PCL. 145
24. The Employee Joint Investment Program (EJIP)
The Company’s Board of Directors meeting held on 30 April 2013 passed a resolution approving the Employee Joint Investment Program (EJIP). The details of the program are as follow:
The Company eligible under EJIP Home Product Center Public Company Limited The Period of EJIP July 1, 2013 to June 30, 2018, with a total duration of 5 years. Eligible employees under EJIP Employees at Division Manager or equivalent level on the
voluntary basis. Directors and advisors of the Company are exclude from this program.
EJIP arrangement The Company will make deduction from the payroll of eligible employees who voluntarily join the EJIP, at the rate 5% of the salary of each month.
The Company will contribute 100% of the amount contributed by EJIP participants on a monthly basis.
EJIP buying schedule Monthly basis. Conditions for holding the securities During the 1st year 3rd year, employee cannot sell any shares EJIP program manager
After the 3rd year, employee can sell 25% of shares accumulated
After the 4th year, employee can sell 50% of shares accumulated
After the 5th year, employee can sell all shares Phillip Securities Public Company Limited
On 11 June 2013, the Company received the approval of Employee Joint Investment Program (EJIP) from Securities and Exchange Commission (SEC).
During the year 2013, the Company contributed Baht 10 million to the program (2012: None).
25. Statutory reserve
Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5% of its net profit after deducting accumulated deficit brought forward (if any), until the reserve reaches 10% of the registered capital. The statutory reserve is not available for dividend distribution.
ANNUAL REPORT 2013146
26. Expenses by nature
Significant expenses by nature are as follows: (Unit: Million Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Salary and wages and other
employee benefits 3,105 2,627 3,023 2,627 Premises expenses 1,476 1,292 1,464 1,292 Depreciation and amortisation 1,649 1,249 1,629 1,248 Sales promotion and operation
support expenses 2,483 1,440 2,453 1,435 Financial costs 277 149 279 149 Tax expenses and fees 885 874 867 868 Changes in finished goods 708 1,030 708 1,030
27. Income tax
Income tax expenses for the years ended 31 December 2013 and 2012 are made up as follows:
(Unit: Thousand Baht) Consolidated
financial statements Separate
financial statements 2013 2012 2013 2012 (Restated) (Restated) Current income tax: Current income tax charge 807,768 804,416 799,541 798,307 Adjustment in respect of current
income tax of previous year 127 (1,286) 127 (1,286) Deferred tax: Relating to origination and reversal of
temporary differences (19,147) 7,785 (8,991) 7,785 Effects of changes in the applicable tax
rates 888 888 Income tax expenses reported in the
statements of comprehensive income 788,748 811,803 790,677 805,694
HOME PRODUCT CENTER PCL. 147
The amounts of income tax relating to each component of other comprehensive income for the years ended 31 December 2013 and 2012 are as follows:
(Unit: Thousand Baht) Consolidated
financial statements Separate
financial statements 2013 2012 2013 2012 (Restated) (Restated) Deferred tax relating to actuarial gain 4,756 4,756
Reconciliation between income tax expenses and the product of accounting profit multiplied by the applicable tax rates for the years ended 31 December 2013 and 2012
(Unit: Thousand Baht) Consolidated
financial statements Separate
financial statements 2013 2012 2013 2012 (Restated) (Restated) Accounting profit before tax 3,857,230 3,482,599 3,910,608 3,457,244 Applicable tax rate 20% 23% 20% 23% Accounting profit before tax multiplied
by applicable tax rate 771,446 800,998 782,122 795,166 Adjustment in respect of current
income tax of previous year 127 (1,286) 127 (1,286) Effects of changes in the applicable tax
rates 888 888 Effects of:
Income not subject to tax (7,999) Nondeductible expenses 24,077 21,424 23,957 21,416 Additional expense deductions
allowed (8,293) (10,324) (8,216) (10,324) Others 1,391 103 686 (166) Total 17,175 11,203 8,428 10,926 Income tax expenses reported in the
statements of comprehensive income 788,748 811,803 790,677 805,694
ANNUAL REPORT 2013148
The components of deferred tax assets and deferred tax liabilities are as follows: (Unit: Thousand Baht)
Consolidated financial statements Separate financial statements 31 December
2013 31 December
2012 1 January
2012 31 December
2013 31 December
2012 1 January
2012 Deferred tax assets Allowance for doubtful
accounts 663 663 2,366 663 663 2,366 Allowance for diminution in
value of inventories 41,581 35,901 31,105 40,701 35,901 31,105 Allowance for asset
impairment 15,568 11,836 21,630 15,568 11,836 21,630 Provision for longterm
employee benefits
22,445
20,948
18,270
21,678
20,948
18,270 Deferred purchase
discount 2,522 2,784 7,435 2,513 2,784 7,435 Unused tax loss 8,500 Total 91,279 72,132 80,806 81,123 72,132 80,806 Deferred tax liabilities Actuarial gain 4,756 4,756 4,756 4,756 Total 4,756 4,756 4,756 4,756
Deferred tax assets net 86,523 67,376 80,806 76,367 67,376 80,806
In October 2011, the cabinet passed a resolution to reduce the corporate income tax rate from 30 percent to 23 percent in 2013, and then to 20 percent from 2013. In addition, in order to comply with the resolution of the cabinet, in December 2012, the decreases in tax rates for 2013 2014 were enacted through a royal decree. The Company has reflected the changes in the income tax rates in its deferred tax calculation, as presented above.
28. Earnings per share
Basic earnings per share is calculated by dividing profit for the year attributable to equity holders of the Company (excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year. The number of ordinary shares of the year 2012 used for the calculation, as presented for comparative purposes, has been adjusted in proportion to the change in the number of shares as a result of the distribution of the stock dividends of 1,173.61 million shares on 26 April 2013 and the distribution of the stock dividends of 1,369.91 million shares on 8 November 2013, as if the shares comprising such stock dividends had been issued at the beginning of the earliest period reported.
HOME PRODUCT CENTER PCL. 149
Diluted earnings per share is calculated by dividing profit for the period attributable to equity holders of the Company (excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year as discussed in the above paragraph, plus the weighted average number of ordinary shares which would need to be issued to convert all dilutive potential ordinary shares into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the year or on the date the potential ordinary shares were issued
Consolidated financial statements Weighted average number of Earnings Profit for the year ordinary shares per share
2013 2012 2013 2012 2013 2012 (Million Baht) (Million Baht) (Million shares) (Million shares) (Baht) (Baht) (Restated) (Restated) (Restated) Basic earnings per share Profit attributable to equity holders
of the Company 3,068 2,671 9,588 9,571 0.32 0.28 Effect of dilutive potential ordinary shares Warrants 1 16 Diluted earnings per share Profit of ordinary
shareholders assuming the conversion of
warrants to ordinary shares
3,068 2,671 9,589 9,587 0.32 0.28
Separate financial statements Weighted average number of Earnings Profit for the year ordinary shares per share
2013 2012 2013 2012 2013 2012 (Million Baht) (Million Baht) (Million shares) (Million shares) (Baht) (Baht) (Restated) (Restated) (Restated) Basic earnings per share Profit attributable to equity holders
of the Company 3,120 2,652 9,588 9,571 0.33 0.28 Effect of dilutive potential ordinary shares Warrants 1 16 Diluted earnings per share Profit of ordinary shareholders
assuming the conversion of
warrants to ordinary shares 3,120 2,652 9,589 9,587 0.33 0.28
ANNUAL REPORT 2013150
29. Segment information
Operating segment information is reported in a manner consistent with the internal reports that are regularly reviewed by the chief operating decision maker in order to make decisions about the allocation of resources to the segment and assess its performance. The chief operating decision maker has been identified as the Company’s Board of Directors.
The Company and its subsidiaries are principally engaged in the trading of a complete range of goods and materials for construction, addition, refurbishment, renovation, and improvement of buildings, houses, and residences place, and provision for related services to retail business, together with space rental and provide utilities service (as having revenue and/or operating profit and/or assets less than 10% of total revenue and/or total operating profit and/or total assets of all segments, which do not meet the quantitative thresholds as set out in the financial reporting standard).
Segment performance is measured based on operating profit or loss, on a basis consistent with that used to measure operating profit or loss in the financial statements. As a result, all of the revenues, operating profits and assets as reflected in these financial statements pertain exclusively to the aforementioned reportable operating segment.
Geographic information
The Company and its subsidiaries principally operated in Thailand. As a result, all of the revenues and assets as reflected in these financial statements pertain exclusively to this geographical reportable.
Major customers
For the year 2013 and 2012, the Company and its subsidiaries have no major customer with revenue of 10% or more of an entity’s revenues.
30. Provident fund
The Company and its subsidiaries, and their employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both the Company and its subsidiaries, and their employees contributed to the fund monthly at the rate of 3% 5% of basic salary. The fund, which is managed by American International Assurance Co., Ltd., will be paid to employees upon termination in accordance with the fund rules.
During the year 2013, the Company and its subsidiaries contributed Baht 57 million (2012: Baht 48 million) to the fund. (The separate financial statements: Baht 56 million, 2012: Baht 48 million).
HOME PRODUCT CENTER PCL. 151
31. Dividend paid
Dividends Approved by Total
dividends Dividend per share
(Million Baht) (Baht)
Final dividends for 2011 Annual General Meeting of the shareholders on 4 April 2012
876
0.15
Interim dividends for 2012 Extraordinary General Meeting of the shareholders on 5 October 2012
130
0.022223
Stock interim dividends for 2012 Extraordinary General Meeting of the shareholders on 5 October 2012
1,173
0.20
Total for 2012 2,179 Final dividends for 2012 Annual General Meeting of the
shareholders on 5 April 2013 131 0.0186 Stock dividends for 2012 Annual General Meeting of the
shareholders on 5 April 2013 1,174 0.1667 Interim dividends for 2013 Extraordinary General Meeting of the
shareholders on 22 October 2013 153 0.0186 Stock interim dividends for 2013 Extraordinary General Meeting of the
shareholders on 22 October 2013 1,369 0.1667 Total for 2013 2,827
32. Commitments and contingent liabilities
32.1 Operating lease commitments
a) The Company and its subsidiaries have entered into land lease agreements. The terms of the agreements are generally between 24 to 30 years and they are noncancelable, except with the consent of the counterparties.
Future minimum lease payments required under these operating leases contracts were as follows:
(Unit: Million Baht)
Consolidated financial statements
Separate financial statements
2013 2012 2013 2012 Payable: In up to 1 year 112 63 96 63 In over 1 and up to 5 years 442 290 392 290 In over 5 years 2,109 1,495 1,479 1,495
ANNUAL REPORT 2013152
b) The Company has entered into lease agreements to lease commercial space. The terms of the agreements are generally between 17 to 30 years and they are noncancelable, except with the consent of the counterparties.
Future minimum lease payments required under these operating leases contracts were as follows: (Unit: Million Baht)
Consolidated and separate financial statements
2013 2012
Payable: In up to 1 year 119 101 In over 1 and up to 5 years 469 426 In over 5 years 1,138 1,314
The Company has entered into the inventory management services agreement with a subsidiary. Under the conditions of the agreement, the Company is to pay the service fee at a percentage of the subsidiary’s actual cost as stipulated in the agreement.
The Company has entered into seven agreements with two companies to lease and sublease parts of premises in 5 branches for periods of 29 30 years, with a total of rental received in advance amounting to Baht 640 million. The terms of the agreements are until 2033 2036. The Company recognises this income systematically on a straightline basis over the lease period which is the useful lives of the leaseholds.
As at 31 December 2013, the outstanding balance of rental received in advance, net of recognised rental income was Baht 456 million (2012: Baht 478 million).
a) As at 31 December 2013, the Company had commitments totaling Baht 151 million to commercial banks in respect of guarantees provided for leasing, purchases of goods or hire of work, as bonds with State Enterprise (2012: Baht 130 million).
b) As at 31 December 2013, the Company had commitments under letters of credit opened with commercial bank, amounting to USD 2 million (2012: USD 4 million).
HOME PRODUCT CENTER PCL. 153
32.5 Litigation
a) In February 2011, the Company was sued in civil lawsuit brought by a company relating to the breach of contract. The plaintiff is demanding payment for penalty claim from the Company totaling Baht 16.1 million. Subsequently, the Company filed a counterclaim totaling Baht 7.9 million to the plaintiff. However in December 2010, the Company has set aside a liability arising as a result of penalty claim Baht 13.6 million in the financial statements.
In August 2013, the Court of First Instance ordered the Company to pay for penalty claim of Baht 14.1 million plus interest at a rate of 7.5% per annum, commencing from 3 February 2011. However, the Company had already filed an appeal against the judgement to clarify the case.
b) As at 31 December 2013, the Company has been sued for a total of Baht 2.9 million (2012: Baht 0.6 million) for other cases in which the cased are currently being considered by the Court, the outcome of this matter cannot be determined in this stage. The Company believes that it will receive favorable ruling for the cases, therefore no provision has been set aside.
33. Financial instruments
33.1 Financial risk management
The Company’s financial instruments, as defined under Thai Accounting Standard No. 107 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade and other receivables, shortterm borrowing, trade and other payables, shortterm loans, longterm loans, and debentures. The financial risks associated with these financial instruments and how they are managed is described below.
Credit risk
The Company is exposed to credit risk primarily with respect to trade and other receivables. The Company manages the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company does not have high concentrations of credit risk since it has a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of trade and other receivables as stated in the statements of financial position.
Interest rate risk
The Company’s exposure to interest rate risk relates primarily to its deposits with financial institutions, loans and debentures. However, since the Company’s financial assets bear floating interest rates and financial liabilities bear fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal.
ANNUAL REPORT 2013154
Significant financial assets and liabilities classified by type of interest rate, are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.
Consolidated financial statements As at 31 December 2013 Fixed interest rates Non Within Over Floating interest Total Interest 1 year 1 5 years interest rate bearing rate (Million Baht) (% p.a.) Financial assets Cash and cash equivalents 241 566 807 0.75 2.50 Trade and other receivables
1,411 1,411
241 1,977 2,218 Financial liabilities Shortterm loans from
financial institutions 1,360 1,360 2.45 2.90 Trade and other payables 11,057 11,057 Longterm loans 500 1,600 2,100 3.70 3.71 Debentures 6,300 6,300 3.85 4.60 1,860 7,900 11,057 20,817
Consolidated financial statements As at 31 December 2012 Fixed interest rates Non Within Over Floating interest Total Interest 1 year 1 5 years interest rate bearing rate (Million Baht) (% p.a.) Financial assets Cash and cash equivalents 817 82 392 1,291 0.62 3.25 Trade and other receivables
1,252 1,252
817 82 1,644 2,543 Financial liabilities Trade and other payables 8,091 8,091 Longterm loans 300 1,200 1,500 3.70 Debentures 1,700 2,300 4,000 3.00 4.60 2,000 3,500 8,091 13,591
HOME PRODUCT CENTER PCL. 155
Separate financial statements As at 31 December 2013 Fixed interest rates Non Within Over Floating interest Total Interest 1 year 1 5 years interest rate bearing rate (Million Baht) (% p.a.) Financial assets Cash and cash equivalents 150 537 687 0.75 2.50 Trade and other receivables 1,409 1,409 Shortterm loan to
related party 654 654 4.50
654 150 1,946 2,750 Financial liabilities Shortterm loans from
financial institutions 1,360 1,360 2.45 2.90 Trade and other payables 10,064 10,064 Shortterm loan from 90 90 2.75 3.00
related party 500 1,600 2,100 3.70 3.71 Longterm loan 6,300 6,300 3.85 4.60 Debentures 1,950 7,900 10,064 19,914
Separate financial statements As at 31 December 2012 Fixed interest rates Non Within Over Floating interest Total Interest 1 year 1 5 years interest rate bearing rate (Million Baht) (% p.a.) Financial assets Cash and cash equivalents 817 30 381 1,228 0.62 3.25 Trade and other receivables
1,244 1,244
817 30 1,625 2,472 Financial liabilities Trade and other payables 8,055 8,055 Shortterm loan from
related party 90 90 3.00 3.50 Longterm loans 300 1,200 1,500 3.70 Debentures 1,700 2,300 4,000 3.00 4.60 2,090 3,500 8,055 13,645
ANNUAL REPORT 2013156
Foreign currency risk
The Company’s exposure to foreign currency risk arises mainly from trading transactions that are denominated in foreign currencies.
The balances of financial assets and liabilities denominated in foreign currencies are summarised below.
Consolidated and separate financial statements
Financial assets Financial liabilities Average exchange rate Foreign currency as at 31 December as at 31 December as at 31 December
2013 2012 2013 2012 2013 2012 (Million) (Million) (Million) (Million) (Baht per 1 foreign currency unit)
USD 0.69 0.20 32.9494 30.7775 CNY 2.89 5.4756
Foreign exchange contracts outstanding are summarised below (2012: None)
Consolidated and separate financial statements
As at 31 December 2013
Foreign Bought Sold Contractual exchange rate Contractual currency amount amount Bought Sold maturity date
(Million) (Million) (Baht per 1 foreign currency unit)
USD 0.50 32.9700 3 March 2014
33.2 Fair values of financial instruments
Since some of the Company’s financial assets and liabilities are short term in nature, loans and debentures bear interest at rates close to market rate, their fair value is not expected to be materially different from the amounts presented in statements of financial position.
A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.
34. Capital management
The primary objective of the Company's capital management is to ensure that it has appropriate capital structure in order to support its business and maximise shareholder value.
The Company manages its capital position with reference to its debttoequity ratio in order to comply with a condition in the stipulations of debentures, which requires the Company to maintain a debttoequity ratio of not more than 1.75:1.
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No changes were made in the objectives, policies or processes during the years end 31 December 2013 and 2012.
35. Events after the reporting period
On 25 February 2014, the meeting of the Company's Board of Directors passed the following resolutions to propose to Annual General Meeting of the Company’s shareholders for approval.
1. To approve allocations of the Company’s dividend payment from operating results of July 2013 to December 2013 as follows:
Paid dividend by the Company’s ordinary shares in the ratio of 7 existing shares per 1 dividend share, not exceeding 1,370.35 million shares, or in the total amount not exceeding Baht 1,370.35 million or shall be converted as dividend payment at Baht 0.1429 per share. In case that any shareholder holds the indivisible share remaining after such allocation, the dividend shall be paid by cash in the amount of Baht 0.1429 per share.
Paid dividend by cash at the rate of Baht 0.0159 per share or in the total amount not exceeding Baht 152.48 million.
The payment of such stock dividend and cash dividend shall be made within 8 May 2014.
As the Extraordinary General Meeting of the Company's shareholders held on 22 October 2013 has the resolution to approve interim dividend payment to the shareholders as stock dividend of Baht 0.1667 per share and cash dividend of Baht 0.0186 per share. The interim dividend was paid on 30 October 2013. As a result, total dividend per share for the year 2013 is Baht 0.3441 per share (before taking dilution effect).
2. To decrease the registered capital of the Company from Baht 9,589.85 million to Baht 9,589.55 million by cancelling the registered ordinary shares remaining after the stock dividend allocation of 0.3 million ordinary shares with a par value of Baht 1 each, previously made in accordance with the resolution of the Extraordinary General Shareholders Meeting no. 1/2556.
3. To increase the registered capital from the previous registered capital of Baht 9,589.55 million to be the new registered capital of Baht 10,959.90 million by issuing an additional 1,370.35 million ordinary shares at the par value of Baht 1 each to support the payment of a stock dividend.
36. Approval of financial statements
These financial statements were authorised for issue by the Company’s Board of Directors on 25 February 2014.
Home Assistance
Home Product Center Plc.
Mega Home Center Co.,Ltd.
96/27 Moo 9 Tambon Bangkhen, Amphoe Muang, Nonthaburi 11000 Telephone +66 (0) 2832 1000 Fax +66 (0) 2832 1400
49 Moo 5 Tambon Klong Nueng, Amphoe Klong Luang, Patumthani 12120Telephone +66 (0) 2516 0099 Fax +66 (0) 2516 0098
รังสิต 0 2516 0088Greater Bangkok :Rangsit 0 2516 0088
North : Mae Sod 0 5550 6955
0 4534 4700
Greater Bangkok : Chaengwatthana 0 2962 6955Ekamai-Ramindra 0 2933 5000Fashion Island 0 2947 6365Future Mart 0 2689 0844Latphrao 0 2983 7444Lumlukka 0 2997 4800Mega Bangna 0 2186 8811Paradise Park 0 2746 0377Petchkasem 0 2444 4699Ploenchit 0 2655 3400Prachachuen 0 2955 5888Phutthamonthon 0 2444 5566Rama II 0 2895 6555Ramkhamhaeng 0 2735 4999Rangsit 0 2958 5699Ratchadaphisek 0 2641 2900Ratchapruk 0 2423 3222Rattanathibet 0 2921 2400Sukhaphiban 3 0 2976 9114
Suvarnabhumi 0 2325 1200The Mall Bangkae 0 2454 9299 Central : Ayutthaya 0 3524 9499Lopburi 0 3661 4100Saraburi 0 3622 4444 West : Hua Hin 0 3252 6000Kanchanaburi 0 3460 2700Mahachai 0 3446 9688Nakhonpathom 0 3421 3200Ratchaburi 0 3232 0999Suphanburi 0 3554 3777
East :Chachoengsao 0 3881 2600Chanthaburi 0 3941 9000 Chonburi 0 3878 5111Pattaya 0 3836 0422Prachinburi 0 3748 2222Rayong 0 3880 9333 North-East :Buriram 0 4469 0755Chaiyaphum 0 4405 1800 Loi 0 4284 5800Khao Yai 0 4432 8799Khonkaen 0 4336 5365Nakhonratchasima 0 4428 2550Roi-et 0 4352 4988Sakonnakhon 0 4273 0090The Mall Korat 0 4428 8345Ubonratchathani 0 4534 4700Udonthani 0 4230 9000
North : Chiangmai 0 5385 1229Chiangmai-Hangdong 0 5344 7939Chiangrai 0 5360 4444Nakhonsawan 0 5637 1300Phitsanulok 0 5528 9009Phrae 0 5453 2222Phetchabun 0 5671 9555 South : Chumphon 0 7765 8900Had Yai 0 7446 9055Had Yai-Kanchanavanich 0 7421 0999Krabi 0 7581 0499Nakhonsitammarat 0 7532 4740Phuket 0 7625 5181Phuket-Chalong 0 7660 2399Samui 0 7723 1900Suratthani 0 7791 2474Trang 0 7522 4466
Home Assistance
Home Product Center Plc.
Mega Home Center Co.,Ltd.
96/27 Moo 9 Tambon Bangkhen, Amphoe Muang, Nonthaburi 11000 Telephone +66 (0) 2832 1000 Fax +66 (0) 2832 1400
49 Moo 5 Tambon Klong Nueng, Amphoe Klong Luang, Patumthani 12120Telephone +66 (0) 2516 0099 Fax +66 (0) 2516 0098
รังสิต 0 2516 0088Greater Bangkok :Rangsit 0 2516 0088
North : Mae Sod 0 5550 6955
0 4534 4700
Greater Bangkok : Chaengwatthana 0 2962 6955Ekamai-Ramindra 0 2933 5000Fashion Island 0 2947 6365Future Mart 0 2689 0844Latphrao 0 2983 7444Lumlukka 0 2997 4800Mega Bangna 0 2186 8811Paradise Park 0 2746 0377Petchkasem 0 2444 4699Ploenchit 0 2655 3400Prachachuen 0 2955 5888Phutthamonthon 0 2444 5566Rama II 0 2895 6555Ramkhamhaeng 0 2735 4999Rangsit 0 2958 5699Ratchadaphisek 0 2641 2900Ratchapruk 0 2423 3222Rattanathibet 0 2921 2400Sukhaphiban 3 0 2976 9114
Suvarnabhumi 0 2325 1200The Mall Bangkae 0 2454 9299 Central : Ayutthaya 0 3524 9499Lopburi 0 3661 4100Saraburi 0 3622 4444 West : Hua Hin 0 3252 6000Kanchanaburi 0 3460 2700Mahachai 0 3446 9688Nakhonpathom 0 3421 3200Ratchaburi 0 3232 0999Suphanburi 0 3554 3777
East :Chachoengsao 0 3881 2600Chanthaburi 0 3941 9000 Chonburi 0 3878 5111Pattaya 0 3836 0422Prachinburi 0 3748 2222Rayong 0 3880 9333 North-East :Buriram 0 4469 0755Chaiyaphum 0 4405 1800 Loi 0 4284 5800Khao Yai 0 4432 8799Khonkaen 0 4336 5365Nakhonratchasima 0 4428 2550Roi-et 0 4352 4988Sakonnakhon 0 4273 0090The Mall Korat 0 4428 8345Ubonratchathani 0 4534 4700Udonthani 0 4230 9000
North : Chiangmai 0 5385 1229Chiangmai-Hangdong 0 5344 7939Chiangrai 0 5360 4444Nakhonsawan 0 5637 1300Phitsanulok 0 5528 9009Phrae 0 5453 2222Phetchabun 0 5671 9555 South : Chumphon 0 7765 8900Had Yai 0 7446 9055Had Yai-Kanchanavanich 0 7421 0999Krabi 0 7581 0499Nakhonsitammarat 0 7532 4740Phuket 0 7625 5181Phuket-Chalong 0 7660 2399Samui 0 7723 1900Suratthani 0 7791 2474Trang 0 7522 4466
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