AW AR2014 Homepro English.Indd
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Annual Report 2014 HomePro is the leading home improvement retailer in Thailand . We operate 71 stores nationwide, providing product range cover 40,000 items with complete services as One Stop Shopping to attain hightest customer satisfaction. Sales Net Profit No. of Total Asset New Stores New Relocation Contents 2 Message from Chairman 3 Message from Managing Director 14 Financial Information 15 General Information 20 Board of Directors and Management Profile 28 Nature of Business 33 Risk Factors 38 Shareholding Structure 39 Organizational Chart 40 Management 59 Corporate Governance 67 Sustainable Development Report 98 Internal Control 100 Dividend Policy 101 Related Transaction 103 Management Discussion and Analysis of Financial Status and Operaing Results 111 Audit Committee’s Report 113 Report of Board of Directors’ Responsibilities in the Financial Statement 114 Independent Auditor’s Report 115 Financial Statement Home Product Center Plc. 1 Message from the Chairman “Sustainable growth can be achieved together with the Company’s responsibility to stakeholders, by considering the impacts and benefits to stakeholders from our business operations, both in the short-term and long-term” In 2014, it appeared that Thailand’s economy The Company has realized that profitability and fluctuated a lot over the year. In the first half of sustainable growth can be achieved together with the year, the economy shrank due to political unrest the Company’s responsibility to stakeholders, by having an adverse effect on domestic consumers’ considering the impacts and benefits to stakeholders confidence, especially in the protest areas (i.e. from our business operations, both in short-term and Bangkok and its vicinity). In the second half of the long-term. Moreover, the Company has emphasized year the economy marginally improved, due to the and encouraged our management and staff in all urgent disbursement of the government budget, as departments to have concern and responsibility for all well as positive signs from increasing trends in tourist stakeholders, and pursue co-operation in economic, numbers, investment, and employment in private social, and environmental issues. sectors. Nevertheless, the economy is only gradually recovering because domestic purchasing power is still For 2015, the Company will continue to move weak as a result of the drop in agricultural goods forward with new branch expansion and will seek prices, and high levels of household debt causing business opportunities in which the Company will people to be unable to fully spend their money. focus on good corporate governance, increases in operating efficiency, cost reduction, and efficient However, the expansion of the Company is still in use of resource. line with plan. The Company has opened 8 new HomePro stores (including 1 branch opened to replace Lastly, on behalf of Home Product Center Public a former one), expanding both in provinces already Company Limited, I would like to convey my having our branches (Prachuapkhirikhan, Chiangmai, appreciation and thanks to all shareholders, Nakhonratchasima, Phuket, and Chonburi) and into customers, financial institutions, mass media, and new provinces (Surin and Lampang). Furthermore, business alliances for always providing us with good the Company has opened 2 more branches of Mega support. The Company would like to affirm our Home in order to expand our market base. In intention to continually operate and develop our addition, the Company has started moving in to the business to grow successfully for the highest benefit Asian Economic Community (AEC) by expanding our of all stakeholders. business overseas for the first time under the HomePro format, in Kuala Lumpur, Malaysia, where the first branch is located in IOI City Mall, and has enjoyed a good response. (Mr. Anant Asavabhokhin) Chairman 2 Annual Report 2014 Message from the Managing Director “The Company has commenced its overseas business expansion by taking the “HomePro” brand to debut in Kuala Lumpur, Malaysia; this is the first step in the Company’s plan to enter into the Asean Economic Community (AEC)” Despite the economic situation, we regard 2014 as who have been certified for skill standard) to provide another year of achievement for business growth greater comfort to lady and elderly customers. of the Company. In terms of business expansion, the Company has opened 8 new HomePro stores at For responsibilities to stakeholders in 2014, the Lampang, Prachuapkhirikhan, Surin, Chiangmai Company and our business partners have jointly - Sansai, Sriracha, Phuket - Thalang and North - contributed to delivering an additional 333 bathrooms Pattaya, and also at Korat-Hua Thalae branch (to under the “Kids’ Toilet Project”. Consequently, up to replace the store in the Mall-Korat branch), as well the end of the year 2014, there are now a total of as opening 2 new Mega Home stores at Nhong- 2,136 repaired bathrooms at 159 schools, covering 41 Khai and Bor-Win. In addition the Company has provinces; over 70,000 students are now benefiting commenced its overseas business expansion by taking from this project. In addition, the Company has the “HomePro” brand to debut in Kuala Lumpur, engaged the business to be responsible for the Malaysia; this is the first step in the Company’s plan environment and other stakeholders e.g. energy saving to enter into the Asean Economic Community (AEC). and the distribution of energy saving products, waste As a result of this expansion, and the implementation water treatment, human resources development, of various strategies to create business opportunities, and organizing skill development and improvement the Company was able to generate total revenue activities etc. for the whole year of Baht 51,208.59 million, which represents an increase of 19.86% compared to the For the above accomplishments, the Company would previous year, with net profit of Baht 3,313.33 million, like to thank all customers, business partners and an increase of 7.98%. shareholders, as well as other stakeholders in all sectors, for always providing us good support. We The Company is continuously selecting and developing would also like to thank our staff of over 10,000 goods and services in order to increase quality people for their hard work in driving the Company and provide options for our customers. In 2014, to steady growth. the Company launched “HomePro Application” to be downloaded on smart phones and used as a communication channel, and also giving discounts and other privileges to Home Card memberships. In addition, the Company has added some additional services to satisfy our customers e.g. delivery service (Mr. Khunawut Thumpomkul) all over Thailand, home maintenance service, and Managing Director lady service (a service provided by lady mechanics Home Product Center Plc. 3 DOMESTIC EXPANSION NEW 8 STORES HomePro operates a retail business in home improvement segment by selling products cover more than 40,000 items and providing complete range of services relating to construction, addition, refurbishment, renovation, improvement of buildings, houses, and residential places as One Stop Shopping Home Center. In 2014, HomePro opened 8 additional new stores in Lampang, Prachuapkhirikhan, Surin, Chiang Mai -San Sai, Sriracha, Phuket-Talang, North Pattaya and relocated to Korat-Hua Thalae branch replacing The Mall Korat branch to respond to the expanding market demand. As of 2014, HomePro has total of 71 branches nationwide, of which 21 branches are located in Bangkok and its vicinity and another 50 branches in upcountry. 4 Annual Report 2014 NEW 2 STORES The center for construction materials for both wholesalers and retailers with more than 80,000 products, Mega Home is aimed to be a one- stop hub of home improvement products and construction materials for the entire house. It offers a wide range of products for structural work, systematic work, interior work, and household goods with standards and prices that satisfy contractors, wholesalers, and homeowners. This year, the Company opened 2 branches of Mega Home in NongKhai and Bor Win-Chonburi, making the total numbers of branch to be 4. 1ONLINE SHOP Online shop is another HomePro’s channel that offers more than 30,000 home improvement products with discount and promotions for the whole year. Customers can buy products anywhere, 24 hours, and also get our delivery service, installation service, and product guarantee at www.directtoshop.com Home Product Center Plc. 5 OVERSEAS EXPANSION Malaysia First footprint in AEC We are now ready to go for the next step. As a leading home improvement retailer in Thailand, we are now ready to go for the next step. Equipped with skills, experiences, and determination, HomePro is fulfilling its vision to become a leader of home center business in Thailand and South East Asia. In 2014, the company began to expand into foreign market for the first time, starting at Putrajaya Malaysia, a planned city developed to be the center of federal administration apart from Kuala Lumpur. The city was built to support the rapid expansion of urban society and was planned so that its town planning, transportation system, infrastructures and residential areas are systematically developed. 6 Annual Report 2014 HomePro Malaysia began its operation in November 2014 at IOI City Mall. Developed by a major real estate developer in Malaysia, IOI City Mall has a total net lettable area of 1.4 million square feet, being one of the biggest shopping mall in the world. Since HomePro Malaysia’s grand opening, it has been warmly welcomed by the customers, who view that the products sold there have high quality and reasonable prices. Home Product Center Plc. 7 HOMEPRO EVERYDAY To extensively respond to the clients’ everyday needs The core of HomePro’s product selection is its determination to bring the best products to customers; therefore, quality and worthiness are at the heart of our products. In 2014, the company handpicked quality products and increased the variety of product selections not only for its main product groups but also for everyday products, such as light bulbs and cleaning products, to extensively respond to the customers’ everyday needs.