ANNUAL REPORT 2017 Loxley Public Company Limited 41 Trading Business Group CONTENTS 43 International Trade Business Group 02 Vision, Mission 44 Service Business Group 03 Corporate Goals and Strategy 46 Joint Venture Business Background, Major Changes and Support Unit 04 Milestones 49 Corporate Social Responsibility 05 Message from the Chairman 52 Risk Factors 06 Activities 2017 59 Legal Disputes 08 Financial Summary 61 Details of the Company 09 Revenue Structure 62 Capital Structure 10 Company Structure 2017 63 Details of Ownership in Related Parties 11 Company Structure 2018 66 Management 12 Board of Directors 73 Executive Remuneration 14 Executive Board 85 Corporate Governance 16 Management Board 86 Personnel 18 Department Management 97 Information of Company Executives Directors in Subsidiaries 100 19 Director's Positions 21 IT Business Group 118 in the Related Parties 25 Telecom Business Group 121 Director's Positions in the Subsidiaries 26 Technology Business Group 123 Internal Control and Audit Project Business Group Report of Board's Responsibility 29 125 for Financial Report Construction Business Group 33 126 Report of the Audit Committee Infrastructure Business Group 36 128 Related Transactions 38 Alternative Energy Business Group Management Discussion and Analysis 136 to the Results of Business Operations 147 Independent Auditor’s Report 152 Financial Statements 240 Auditor Remuneration, Other Parties VISION “Inspired Choice for Customers, Business Partners and Investors” MISSION 1. We seek to provide greater value in products and services to ensure complete customer satisfaction. 2. We strive to keep ahead of market changes and foster a climate of business innovation. 3. We seek to maintain our leadership in the area of information technology for our business progress. 4. We seek to continually strengthen our financial and human resources. 5. We shall adhere to the fair conduct of business for our shareholders, employees, and society. CORPORATE GOALS AND STRATEGY In 2017, the Company had gone through the business transformation from one with multiplicity to that with specificity which focuses on businesses with strong points and greater competitive edge to meet market changes as well as economic, political and social changes that will lead to sustainable development for the Company. This business restructure will be of benefits to the Company, not only in wiping off its image as operator of multi-faceted businesses but by re-organizing its task forces, it is now focused on businesses with profitable trends and potential and are prevalent in the growing industries. Each business group will comprise of proximate work units which are conducive towards one another such that they can build up their strong points to boost not only their income but also their competitive edge which will help cut down on duplicated expenses in this synergy to both increase its revenue and reduce expenses. Operations under this new business re-organization will start in 2018. In brief, the main goals for 3-dimensional development in this business re-organization are as follows: Increasing competitive capacity with focus on businesses that have the competitive potential and profit-generating capacity. 1 Developing human resources capabilities and building up the Corporate Culture with focus on maximizing the enhancement and allocation of its resources. 2 Increasing operating capacities, figure-wise, for both revenue and profits to reduce risks and increase returns for the Company’s stakeholders. 3 ANNUAL REPORT 2017 04 LOXLEY PUBLIC COMPANY LIMITED BACKGROUND, MAJOR CHANGES AND MILESTONES Loxley Public Company Limited has operated its business for industrial products and advanced technology products. Due to over 78 years. It was founded on 15 January 1939 under the its outstanding performance, the Company had attracted a huge name Loxley Rice Company (Bangkok) Limited as a joint venture number of leading local and foreign corporations, many of which between Ng Yuk Long Lamsam and Andrew Beattie of W.R. later became the company’s business partners. By the year Loxley Company of Hong Kong. Initially, the Company’s main 1988, with an aim to meet the ever-changing market demands, activities were exports of agricultural products of Thailand, the Company expanded its business to cover technology. including rice and timbers. On 1 April 1993, the Company was transformed into a public For over seven decades, the business has grown from strength company, being listed on the Stock Exchange of Thailand under to strength. In 1957, the Company’s name was changed to the name of Loxley Public Company Limited. Our shares began Loxley (Bangkok) Company Limited and expanded its export to be traded on 25 January 1994 under the designation “LOXLEY” businesses as well as distribution of foreign products including in the commercial group of stocks. 05 MESSAGE FROM CHAIRMAN OF THE BOARD OF DIRECTORS May I first take this opportunity to express my deep condolences on the death of Mr. Pairote Lamsam, former Chairman of the Board of Directors who passed away on January 17, 2018. Throughout his life, his contribution and behavior had been acknowledged as exemplary in various areas, namely a member of the Senate, the National Legislative Council or Advisor to the Minister of Communications, as well as a philanthropist in many public and social works. In addition, his advices and opinions provided to the management had been always beneficial to the Company. After his death, the Company’s Board of Directors, at its Meeting Another important mission is to conduct a corporate social No. 1/2561 on February 23, 2018, unanimously adopted its responsibility. The Company supports include the project to resolution to appoint me as the next Chairman. I will dedicate support the disabled athletes where our athletes won several my knowledge, ability and experience to ensure that our medals from the ASEAN Para Games 2017, the Creative organization will continue its prosperity and sustainable growth Communities Project, the project that contributes back to the in the future. society and several volunteer projects. In the early of 2018, we have transformed our business structure On behalf of the Company’s Board of Directors, I would like to once again to keep pace with an ever-changing business express my gratefulness to our shareholders, investors, business environment. This past one year has proved the fact that we partners, customers and financial institutions for their continuing have indeed headed to the right direction. support toward our business operations. Last but not least, I deeply appreciate the dedication of our executives and In this new business structure, the Company will selectively employees for the Company. consider running businesses with great potential in the growing industry. The similar and congruent business units are classified With the capabilities of Loxley personnel coupled with our and grouped together so that their capabilities can be business transformation and the support from every entities in strengthened, additional revenue can be maximized and the Company, I am confident that Loxley Group will definitely ultimately, the competitive advantage can be enhanced. develop towards prosperity. Moreover, the unnecessary expenses will also be reduced. I strongly believe that this business transformation will create a recognizable development and evolution for Loxley in the years to come. (Mr. Dhongchai Lamsam) Chairman of the Board ANNUAL REPORT 2017 06 LOXLEY PUBLIC COMPANY LIMITED ACTIVITIES IN 2017 “Loxley Souls Threaded Together in Heartfelt Gratitude for His Majesty King Rama IX” were held in 9 activities in his honour such as making the traditional incendiary (Chand) flowers for his cremation, public reading of his speeches and planting of sunflower plants to show the loyalty and endless gratitude felt by his people and the nation. The “Loxley Learning Centre” was handed over to the Ban Mae Loxley Public Company Limited and ASM Security Management Thao Klang Mitraparb Community School at 26, Mae Sot District, Co., Ltd. hosted celebrations for the “Loxley Sports Heroes” Tak Province with Air Chief Marshal Prajin Jantong, Deputy Prime Para Sports Team for their achievements in the 9th ASEAN Minister presiding over the ceremony. Para Games 2017 in Malaysia. Loxley Public Company Limited welcomed H.E. Ambassador Loxley Orbit Pcl under Loxley affiliation signed an agreement Glin T. Davis, the United States Ambassador to Thailand on his with Money Table Plc to jointly develop an online lending platform visit to the company for an exchange of views with Loxley and provide financial facilities as part of welfare packages for Management on business opportunities. its personnel to efficiently facilitate their loan transactions with speed, safety and proper risk management. 07 Loxley Public Company Limited and the Hindalco Group from India Loxley Public Company Limited handed over the “Phuket Smart Bus” jointly held an Exhibition on Hindalco products and products master model under the Mercedes Benz brand to Phuket Pattana from Loxley Pcl’s Chemical Products Group in the “ASEAN Muang Pcl for its trial run to provide services to tourists as a part of Ceramics 2017” Fair at BITEC Convention Centre in Bangna. creative business movement under the “Phuket Smart City” Project.” Loxley Public Company Limited signed an agreement with the Loxley Trading Company Limited under Loxley affiliation signed Department of Irrigation in the Project to set up a Smart Water