SAHA-UNION PUBLIC COMPANY LIMITED COMPANY PUBLIC SAHA-UNION SAHA-UNION PUBLIC COMPANY LIMITED SAHA-UNION PUBLIC COMPANY LIMITED ANNUAL REPORT 2015 REPORT ANNUAL - 1828 Sukhumvit Road, Bangchak, Phrakanong, Bangkok 10260 SAHAANNUAL REPORTUNION Tel : 0 2311 5111-9, 0 2332 5600 Fax : 0 2331 5668 www.sahaunion.com 2015 บร�ษัท สหยูเนี่ยน จำกัด (มหาชน) บร�ษัท สหยูเนี่ยน จำกัด (มหาชน) บร�ษัท สหยูเนี่ยน จำกัด (มหาชน) 1828 ถนนสุขุมว�ท แขวงบางจาก เขตพระโขนง กรุงเทพฯ 10260 SAHAรายงานประจำป-UNION โทรศัพท : 0 2311 5111-9, 0 2332 5600 รายงานประจำป 2558 โทรสาร : 0 2331 5668 www.sahaunion.com 2558 VISION A leading and reliable investment Company engaging in diverse business activities, managing the investments for the Company’s growth and long-term stability with sound return on investments. MISSION • To develop the growth and stability of existing businesses. • To enlarge/extend the businesses that members of the Group are adept and well versed. • To administer existing investments while exploring new opportunities offering long-term potential and sound return on investments. • To groom new generation of knowledgeable and efficient executives with leadership quality, those who could blend well with the Company’s cultures, uphold integrity, quality and service. • To promote and avail the employees the opportunities to continuously develop their knowledges and skills. • To persistently instil the Company’s good will. • To regulate the administration of the Company for efficiency, transparency and conformity with international auditing standards, in order to increase the value and obtain optimum results for the Company, all participants and stakeholders, i.e., employees, shareholders, investors, customers, trade partners, creditors, competitors, communities, societies and the Country. INTEGRITY QUALITY SERVICE GOAL The Company’s goal is to conduct business by investments in various businesses with a system of good governance and growth in order to strive to maximize the benefits to all stakeholders under the moral of integrity, quality and service. STRATEGY To invest in the businesses with appropriate returns by taking into account the risks potential accordance with the strategies to meet the situation may change in the future. CONTENTS 3 Major Financial Information and Ratio 4 Board of Director’s Report 8 Board of Directors 18 IOD’s Accreditation and Certification Training Program of The Board of Directors 19 Board Structure and Company Executives 20 Direct Investment of Saha-Union in Group Companies 22 Business Results and Five Years Financial Status 24 Revenues Structure of The Company and Its Subsidiaries 25 Investment Structure of The Company and Its Subsidiaries 26 Textile Business 28 Plastic, Rubber and Metal Businesses 30 Trading Business 33 Hotel Business 34 Energy Business in The People’s Republic of China 36 Other Businesses in The People’s Republic of China 39 Corporate Social Responsibility (CSR) 44 Corporate Social Responsibility Activities 49 Shareholding Structure 53 Structure of Management 59 Corporate Governance 71 Internal Control and Risk Management 76 Risk Factors 79 Management Discussion and Analysis 93 Related Transactions 94 Related Transactions of Saha-Union Plc. and Parties Possibly in Conflict 96 Audit Committee’s Report 97 Board of Directors’ Responsibility for the Financial Report 98 Independent Auditor’s Report 99 Financial Statements 108 Notes to Consolidated Financial Statements 182 Auditor’s Remuneration 183 Principles of Corporate Governance 185 Information Guide under Form 56-2 187 General Information and Other Important Information 188 Juristic persons of which The Company’s Shareholding exceed 10% 192 Office Locations MAJOR FINANCIAL INFORMATION AND RATIO (Unit : Million Baht) Saha-Union Public Company Limited (Consolidated) 2015 2014 2013 (Restated) Total revenues 11,276.2 10,825.9 10,835.4 Revenues from sales and services 10,117.6 9,685.8 9,418.1 Gross profit 1,402.2 1,219.4 1,137.5 Profit for equity holders of the Company 917.3 1,003.3 938.5 Total assets 23,627.0 22,136.9 21,474.5 Total liabilities 3,339.3 2,823.9 2,627.4 Total shareholders’ equity 20,287.7 19,313.0 18,847.1 Earning ratio (%) 8.13% 9.27% 8.66% Earnings per share (Baht) 3.16 3.46 3.24 Book value per share (Baht) 63.76 61.32 59.95 Net asset value per share (Baht) 63.76 61.32 59.95 Return on assets (%) 4.01% 4.60% 4.18% Return on equity (%) 5.06% 5.71% 5.59% Debt to equity ratio (Times) 0.18 0.16 0.15 (Unit : Million Baht) Saha-Union Public Company Limited 2015 2014 2013 (Restated) Revenues 2,137.4 2,760.9 3,065.0 Sales and service income 1,273.7 1,283.7 1,137.1 Export sales 520.9 536.4 488.1 Local sales 752.8 747.3 649.0 Gross profit 23.1 18.2 19.8 Profit for equity holders of the Company 574.2 1,205.8 1,449.8 Earnings per share (Baht) 1.91 4.02 4.83 Dividend per share (Baht) 1.50 1.75 2.00 Book value per share (Baht) 45.61 45.81 43.70 SAHA-UNION PUBLIC COMPANY LIMITED 3 BOARD OF DIRECTOR’S REPORT THE COMPANY HAS CONDUCTED FOR YEARS ITS BUSINESS WITH DETERMINATION AND ALL STRENGTH BY IMPROVING STRATEGIES ON INVESTMENT AND MODIFYING BUSINESS PLANS, SEEKING OPPORTUNITIES TO EXPAND INVESTMENTS FOR NEW BUSINESSES TO GROW A GOOD STRONG AND LASTING SUSTAINABLE BUSINESS Miss Sriwarin Jirapakkana Chairman 4 ANNUAL REPORT 2015 In Thailand, economic growth rate in 2015 could it is uncertain whether the industry business would be considered slightly better than in 2014 despite signs continue to do well in the long term. In 2015, there of economic slowdown. Due to many unpredictable were significant changes. That is, in July, a new factors emerged such as the ongoing sharp decline joint venture business was set up under the name in oil prices, a decrease in consumer supply and of Sukhumvit 62 Medical Ltd. to be operated as a demand consistent with slowly recovering world private hospital and nursing home, providing medical economy, slowing economic growth in China and services and nursing care. This new project which is Asia and the devaluation of Chinese Yuan currency’s an opportunity of hospital business expansion annoucement. These factors had an impact on business required a construction undertaking and a provision operations. Consumers lost confidence, leading to a of equipment and material including related supplies. decrease in their purchasing power as well as The investment amounted to Baht 1,800 million consumption. The export trade of Thailand was in or 47.21% of the total investment. Apart from this, recession whereas the tourism sector achieved in November 2015, the Jiashan-Union Development significant growth and was likely to continue. Co., Ltd. (JD), Real Estate business operator in Jiashan, However, the government had contributed to an Zhejiang Province, the People’s Republic of China, economic drive by investing in several projects and approved to close the Project Phase 3 and modified implementing continuously economic and investment shareholders structure by reducing the Company’s stimulus measures, resulting in growing trend of the capital. The Company and its subsidiary (Thai private sector’s consumption. Anyhow, the overall party) who disposed the investment amounting economic recovery has not still reached all sectors, to RMB 137.2 million. The total amount they especially agricultural and export sectors. As agricultural expected to receive amounted to RMB 220 million on products were at low price, in addition to their low condition that this plan would be approved by the household income, the agricultural workers had a heavy authorities. After returning correctly this amount to the debt which hindered consequently their consumption. Thai party, the Chinese party would continue to conduct Meanwhile, the private sector’s investments have been the JD’s business. The procedure is expected to be adversely affected by the slowly recovering export ended by mid-year 2016. trade and the highly remaining production capability, underlying a slowdown in investment by certain In the past year, the Saha-Union Public Company business traders. Limited’s performance was affected by the slowing world economy. Nonetheless, the Company tried to In 2016, it is forecast that economic growth would adjust itself by managing production costs, improving be sluggish because of some factors. These factors manufacturing process to enhance efficiency, concern the government’s economic and investment expanding investment plans, increasing products stimulus measure impulses with the aim of promoting distribution for the purpose of expanding into new the private sector’s investments leading to an increase in customers, providing training courses and skills practices consumers’ purchasing power. Furthermore, the linkage in relation to personnel matter, carrying out research from the AEC economic liberalization, economic and developing products with the aim of adding recovery in major countries such as the USA, an easing their value and increasing competitive capability monetary policy in some countries would bring about continuingly. Here below are the Company’s results of an improvement in terms of demand and prices of business operations as well as key changes; merchandise in the global market. Nevertheless, the slowing economic climate in China would be a major Textile business was affected by the world risk factor of overall world economy. economy showing no sign of recovery from the recession, especially among the EU countries which are the main The Company has striven over years to do a study foreign markets, leading to a decrease in purchasing and diversify businesses for investment expansion in power. Moreover, the Company could not raise its selling a bid to establish long-term yields for the Company and prices because of intense price competition in the rival their shareholders. Despite its good returns at present, countries having advantages.