Delivering the Pride of Thailand
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ANNUALANNUAL REPORT REPORT 2020 2020 ANNUALANNUAL REPORT REPORT 2020 2020 Kerry ExpressKerry (Thailand) Express Public (Thailand) Company Public Limited Company Limited 906, 9th Floor, Chao906, 9 Phyath Floor, Tower, Chao Phya Tower, 89 Soi Wat Suan89 Plu,Soi WatNew Suan Road, Plu, New Road, Bangrak, BangkokBangrak, 10500, Bangkok Thailand 10500, Thailand Head Office Head OfficeInvestor RelationsInvestor Relations +66 (0) 2238 5558+66 (0) +662238 (0) 5558 63 198 +661217 (0) 63 198 1217 2020 REPORT ANNUAL 2020 REPORT ANNUAL https://th.kerryexpress.comhttps://th.kerryexpress.com Call Centre 1217Call Centre 1217 DELIVERINGDELIVERING THE PRIDE THE PRIDE OF THAILAND OF THAILAND ANNUALANNUAL REPORT REPORT 2020 2020 (FORM 56-1 ONE(FORM REPORT) 56-1 ONE REPORT) Made from ProcessedMade from from GloballyProcessed certified from Globally certified 30% Recycled paper wind30% power Recycled energy papereco-friendlywind power producer energy eco-friendly producer Kerry Express (Thailand)Kerry Express Public (Thailand) Company Public Limited Company Limited Contents Chairman’s Business Overview 2 Message 18 19 Business Strategy and Overview 32 Risk Management Vision, Mission 39 Driving Towards 4 and Core Values Sustainable Growth 49 Management Discussion Corporate Strategies and and Analysis 6 Our Competitive Strengths Corporate Governance 56 57 Good Corporate Operational Governance Principles 8 and Financial Highlights 72 Governance Structure and Management Information Awards 108 Internal Control 12 and Recognition 114 Related Party Transactions Our Year of Financial Statements 14 Transformation 126 Key Milestones General and Other 16 188 Significant Information Chairman’sCorporate Governance Message Chairman’sCorporate Governance Message Chairman’s Message Looking back, 2020 was a year of unprecedented challenges for Thailand and We will continue Despite the difficulties of 2020, last year ended perfectly for KEX when we Delivering Thai people. However, it is in times of such adversity that the quality, resilience to be agile and resilient were listed on the SET on Christmas Eve. In this festive season, KEX quickly the Pride and values of a country and, indeed, of a company prevail. While Thailand to change, highly became a stock code that was very well-known in households across the country was among the best-performing Asian countries in terms of how it countered focused on making and a symbol of trust among our existing and future shareholders. of Thailand the threat of COVID-19, Kerry Express (Thailand) Public Company Limited our services greater, (“KEX” or “Kerry Express”) was proud to play a major role in helping the country and fully responsible Leveraging on our resilient business model, proven track record of operational and its people through these trying times with our best-in-class services to all people, including excellence and continuous innovation, financial strengths, and remarkable and tight internal disease prevention measures. our stakeholders governance, KEX is well-positioned to seize the opportunities that lie ahead and shareholders, in 2021. We will continue to be agile and resilient to change, highly focused Faced with the most severe pandemic of our times, KEX continued to our valued customers on making our services greater, and fully responsible to all people, including deliver growth and positive financial results, while also continuing to recruit and our thousands of our stakeholders and shareholders, our valued customers and our thousands and train talents from different disciplines to become our future leaders hardworking employees. of hardworking employees. in different positions. KEX was founded in Thailand in 2006. Striving to be the pride of Thailand has Apart from enhancing our core delivery network and improving our overall always been our vision, and we will continue devoting ourselves to achieving efficiency, we did not forget to innovate. For example, the farm-to-table service that aim in the years to come. we launched during the lockdown in the second quarter of last year not only helped farmers sell and send their produce to local consumers, but also opened up a whole new segment us, which we believe offers tremendous growth potential. Kledchai Benjaathonsirikul Chairman of the Board of Directors 2 3 Vision, Mission and Core Values “Thailand’s forefront express delivery company focusing on delivering utmost quality products and services that exceed customer expectations” Mission “We are committed to providing quality services, enriching our society, caring for our staff and being responsible to our stakeholders and investors.” 4 Vision, Mission and Core Values Core Values HI STEP Honesty We are committed to high ethical standards, operating with transparency and guided by relevant rules and regulations. Innovation We encourage creative solutions and constantly innovate to meet our customers’ unmet needs and to enhance value for our customers, employees and our business. Service-minded We strive to deliver the utmost service excellence which exceeds our customers’ expectations. Teamwork We value united cooperation towards mutual goals as well as the diverse input of individual contributions. Execution We are result-oriented and put our vision and mission into our everyday actions. Positivity We believe possibilities can be realised and challenges overcome through determination and positive mindsets. 5 Corporate Strategies and Our Competitive Strengths Corporate Strategies 1 2 3 Grow leadership in Thailand Grow within the C2C Invest in technology to realise our vision of sector in Thailand & IT systems “Kerry Express Everywhere” Continue to adapt to local habits Continue investing in in-house Continue to expand our network and preferences while further developed proprietary steadily while being guided by penetrating the markets as well as technologies, IT systems, our proprietary data that enables investing in mass marketing and R&D capabilities to improve us to anticipate growth in customer and solidifying our position as our efficiency and drive growth traffic a household brand through new initiatives together with expanding our existing data centres & disaster recovery systems 4 5 6 Continue seeking synergistic Diversify for Integrate Environmental, partnerships & acquisitions sustainable growth Social & Corporate and leveraging strategic Governance shareholders Enhance our revenue streams through our existing network Strive to integrate an ESG Continue to maintain a “carrier and new initiatives while also approach into our business neutral” concept while also selectively pursuing horizontal operations, product & service strategically seeking out expansion and vertical integration development, employee welfare, and investing in synergistic to further strengthen and stakeholder engagement partnerships that will support our our competitiveness, grow as well as to establish sustainable sustainable growth and provide our profits and achieve relationships with the communities assurances for our shareholders organic growth we serve 6 Corporate Strategies and Our Competitive Strengths Our Competitive Strengths “Go-to” leading express delivery company in Thailand with top-ranked express delivery brand recognition. Distinctive strategic partnerships that drive volume growth and increase brand exposure. Scalable and cost-efficient hub-and-spoke business model with a large-scale operation and nationwide coverage, which result in high flexibility, entry barriers and a competitive edge. Attractive financial profile with a track record of superior growth, operational efficiency, strong pricing power and highly diversified revenue streams. Industry-leading service quality and reliability powered by proprietary technology capabilities. Entrepreneurial and experienced management team with a strong corporate culture. 7 Operational and Financial Highlights Operational Operational Excellence and Financial Highlights As a leading express parcel delivery company in Thailand, KEX offers an extensive range of services to various business sectors including Consumer-to-Consumer (C2C), Business-to-Consumer (B2C), and Business-to-Business (B2B). Through our nationwide network, KEX provides quality services with the utmost convenience for its customers. Strong Network with Nationwide 2M 1.2M Coverage sorting capacity average parcels per day delivered per day 15,991 1,230 service points distribution centres 9 23,303 key sorting hub vehicles in the fleet under our management Industry-Leading Service Quality 99.99% 99% next-day delivery service of parcels delivered coverage within Thailand on time < 1.5% of parcels returned Largest Payment-on-Delivery 6.4bn (Baht) Express Company average monthly transaction value 8 Operational and Financial Highlights Financial Excellence 2020 18,917 Sales and Services Income 2019 19,782 Unit: Baht million 2018 13,565 0 5,000 10,000 15,000 20,000 0.1% 1.9% 0.9% 2.2% 3.1% C2C Revenue by B2C Segment 2020 2019 2018 B2B Advertising Income 52.9% 45.1% 51.7% 45.2% 56.3% 40.6% 2020 1,846 EBIT Unit: Baht million 2019 1,676 2018 1,468 0 500 1,000 1,500 2,000 2020 1,405 Net Profit 2019 1,329 Unit: Baht million 2018 1,185 0 300 600 900 1,200 1,500 9 Operational and Financial Highlights Financial Position Unit: Baht million 2019 2020 Cash and cash equivalents 910 9,697 Trade and other receivables 1,722 1,467 Plant and equipment 2,706 2,259 Right-of-use assets 0 5,321 Intangible assets 235 199 Other assets 441 376 Total assets 6,014 19,318 Current portion of long-term borrowings from financial institution