www.homepro.co.th

Continued Growth

A n n u a l R e p o r t 2 0 0 8

Home Product Center Plc. 96/27 Moo 9 Tambon Bangkhen, Amphoe Muang, Nonthaburi 11000

Tel. (66) 02-832-1000 Fax. (66) 02-832-1400

Ho

meP

ro l A

n n u a l R e p o r t 2 0 0 8

Rangsit 02-958-5699

Rattanathibet 02-921-2400

Fashion Island 02-947-6365

Future Mart 02-689-0844

Seri Center 02-746-0377

The Mall Bangkae 02-454-9299

The Mall Korat 044-28-8345

Ratchadaphisek 02-641-2900

Ploenchit 02-655-3400

Phuket 076-25-5189

Chiangmai 053-85-1229

Ramkhamhaeng 02-735-4999

Rama II 02-895-6555

Prachachuen 02-955-5888

Latphrao 02-983-7444

Pattaya 038-36-0422

Chaengwatthana 02-962-6955

Had Yai 074-46-9055

Ratchapruk 02-423-3222

Suvarnabhumi 02-325-1200

Hua Hin 032-52-6000

Samui 077-23-1900

Phitsanulok 055-28-9009

Khonkaen 043-36-5365

Udonthani 042-30-9000

Suratthani 077-48-9199

Petchkasem 02-444-4699

Chonburi 038-78-5111

Ekamai-Ramindra 02-933-5000

Rayong 038-80-9333

Ayutthaya 035-23-6655

Chiangmai-Hangdong 053-44-7939

Krabi 075-81-0499

Phuket-Chalong 076-60-2399

Khao Yai 044-32-8799

1

12th

year HomePro continuous growth

Contents 2 Message from the Chairman

3 Message from the Managing Director

15 General Information

18 Financial Information

19 Nature of Business

22 Risk Factors

24 Shareholding Structure

25 Organization Chart

26 Management

40 Corporate Governance

46 Internal Control

47 Dividend Policy

47 Related Transactions

50 Financial Analysis and Business

Operation Results

54 Report of Board of Directors’

Responsibilities in the Financial Statements

55 Audit Committee’s Report

57 Independent Auditor’s Report

58 Financial Statements

By our unceasing determination to

develop products and services, Homeprocould maintain leading position in

Thailand’s home improvement market

in selling goods and providing complete

range of service relating construction,

addition, renovation, refurbishing of home

and building. Along with store expansion

continuously, most eff ective space

allocation and continuous new product

assortment, we believe we can provide

value for money and highest satisfaction

to home lover. This in turn could sustain

our steady growth and to be excellent

and professional in providing complete

range of service.

22

(Mr. Anant Asavabhokhin)Chairman

Message from the Chairman

Dear Shareholders and Stakeholders,

With the domestic political uncertainty and the US economic crisis which aff ected the European Union and expanded

throughout the world caused the slowdown in the domestic and global consumer confi dence. In addition, the export as the

main income of Thailand severely decreased till the Gross Domestic Products or GDP in 2008 became decreasingly diminished.

The GDP was up 6% in the fi rst quarter of the year but down to 5.3% in the second quarter, 2.6% in the third quarter, and fi nally

-4.9% in the last quarter. Thus, in 2008, the GDP met only 2.6%.

However, the Company’s strength in terms of policy making, consistency in effi cient management, capability enhancement

and product advantages over competitors, the ongoing quests for business opportunity i.e. to increase new branches, develop

service patterns, effi ciency improvement as well as to apply appropriate marketing strategies, this contributed to HomePro’s

sales volume and net profi t in 2008 to increase by 16.29% and 35.06%, respectively.

Despite HomePro had negative same store sales growth in 2007, the Company could turn around same store sales growth

to be positive at 6.6% in 2008 in addition to sales of new store opening in 2008 and sales from HomePro “Expo”.

As for the year 2009, there is inevitable that the Thai economy will be seriously aff ected by the world’s tumbled economy

together with unsettle political situation. This may cause the slowdown in GDP and may lead to the negative one, followed

by unemployment and the lack of consumer confi dence. However, the Company has prepared the plans and strategies to

maintain its continuous growth in sales volume and net profi t. In addition, to achieve this, the cooperation between the

Company’s employees, business partners and shareholders, including trust and support from the Company’s customers is the

essence of all.

Eventually, the Company would like to take this opportunity to express its gratitude to all supports of the Company’s

activities in every respect and hope to receive such good cooperation and support. The Company is committed to operate

and develop its business to prosperity for the highest benefi t of shareholders, business partners, customers, and more than

5,000 employees of the Company all over the country.

“…the Company has prepared the plans and strategies

to maintain its continuous growth in sales and profi t.”

33 (Mr. Khunawut Thumpomkul)

Managing Director

Message from Managing Director

Dear Shareholders and Stakeholders,

Through out the year 2008, Thailand experienced political uncertainty situation, economic crisis, infl ux of both domestic

and international problems, however, the business under the brand of HomePro; “One Stop Shopping home Center”, went

on with stability. The Company’s earnings healthy with sales volume increased by 16.29% and net profi t increased by 35.06%

which was the result of the increase of same store sales growth, opening the new branches, HomePro EXPO event, the increase

of sales proportion of house brand products, the increase of rental revenues, including advertising and in store promotion fees

and other service fees.

In 2008, the Company expanded 3 more branches in Ayutthaya Branch, Krabi Branch, and the second branch of HomePro

in Chiang Mai-Dong Branch. Thus, in 2008, there were 33 branches. And in 2009, the Company plans to increase another 2-4

branches such as in Phuket-Chalong which is the second branch in Phuket, and Khaoyai, which is also the second branch in

Nakorn Ratchasrima, etc.

HomePro EXPO event was an accomplished marketing strategy which was entrusted by business alliance to join in the

event. The event held 2 times in March and October, and contributed satisfactory sales volume and unexpectedly attracted

our customers.

In addition, the Company enhanced the effi ciency of internal management to strengthen capability and competitive

advantage, either in terms of products to meet the demand of customers, increasing house brand proportion, increasing

effi ciency in supply chain and measure to reduce the operation cost.

The Company also focuses on improving service continuously by establishing Customer Satisfaction department to

inspect and improve our service standard in every branch. Our core objective is to maximize customer satisfaction; including

HomeCare Service which off ers checking and cleaning home appliances services covering more areas in the country; Quick

Service which focuses on installation, repair, and improvement. Moreover, the Company also values the importance of products

and services, as well as sales promotions that meet the demand of target group by applying the strategy of Customer Relations

Management (CRM) to create highest satisfaction of customer and enhance brand loyalty with the introduction of Home Card.

Home Card customer database allows HomePro to analyze and study its customer spending behavior in order to present

products and sales promotions to meet highest customer satisfaction and brand loyalty.

The Company is also aware the importance of social responsibility. In 2008, “Kid Toilets” project was continually operated by

refurbishing and/or building hygiene and good sanitary toilets to the elementary schools. Recently, the Company has already

operated the project in 12 provinces, in total 49 schools, and 526 toilets and the project will be continued in 2009. In addition,

the Company also has a plan to set up a Computer Laboratory project to several schools.

From such success, the Company would like to thank you to shareholders, customers, vendors and to all employees for

their determination in hard working and do hope that the shareholders and business parties will continue giving us kind

support.

“…the Company also values theimportance of products and services,

as well as sales promotions that meet the demand of target group…”

4

Continuous

Expansion

4

55

Store ExpansionHomePro branches cover all home lovers area

To emphasize the proven of continuous store expansion, for home lover market of the 2008 policy, we had launched more

3 new branches in Ayutthaya, Krabi and Chiangmai-Hangdong, the second branch in Chiangmai, which is received a great

respond from our customers. At the end of year 2008, we have 33 branches in total, leading to the net gross profi t increasing

from previous year and we still intend to continuously expand new stores in the future. All this for supporting home lover

demand in all over area in Thailand.

Kids Zone @ Market VillageArea expansion value increasing for family lover

As the company’s aim to manage the existing area to be the most effi ciency with opportunity to continuously support

market demand. We have expanded area in the 3rd fl oor of the Hua Hin Market Village Shopping Mall in Prachuab KhiriKhan

Province to be “Kids Market”. To fulfi ll shopping mall to be a center of home lover family, to respond demanding trend and to

pamper children with improving kid development facilities such as Toys R us, playland, Galaxy including tools, utensils, cloths,

toy shop item which are leader brand names and support customer demand for technological admirer by open IT market, the

center of computer, mobile and all kind of computer tools agent. In the future, HomePro prepares to co-operate with other

alliance for another step of being the center of merchandise which complete fulfi ll every demand of home lover family.

66

Private Brand ProductsContinuous being in the mind of customers

To support customer demand, we have launched new products of House Brand group for more 2 brands, those are : “Estetik”

high quality of rubber tree wood and MDF wood kitchen set and “Parno” drain tools under concept of “Only at HomePro”. By

2008, we possess good quality and design of House brand product for 10 brands with more than 1,000 items. This enhanced,

HomePro achieved the profi t and strong growth continuously.

77

HomePro Champion 2nd year To emphasize for being leader of HomePro in the Home improvement business, especially for varieties of home products

and to create inspiration by putting budget for 12 millions baht to conduct competition “HomePro Champion 2nd year” to

make an opportunity for home lover to participate the decorate competition under the concept of “Small Space Great Idea”

and this year, the people who were interested in the competition is excessively increasing from last year and also there was

broadcasting in “Modern Home” program on TV channel 5

The 7-8th HomePro ExpoA great time of returning profi t and worth to customers

During the down time of economic, HomePro reverses trend by establishing the year greatest household product

events. The 7-8th HomePro Expo is to celebrate 12th year anniversary, and to return the profi t to consumers with maximum

discount up to 80% to support our continuous business growth. The area was expanded from 3 halls to 4 halls with totaling

area more than 27,000 square meters. And to develop format of the exhibition to be more complete, new products and new

business alliance are invited to join the events. This is to support customer’s decision and resulting in sales growth increasing

more than ever.

8

Continuous

Service

8

99

Customer SatisfactionAspire of most customer satisfaction

Because voice of customer is always important and valuable, so we pay attention to information keeping by having sector

for research and analyze for every customer demand for solve the problem, quality development and improve of product

and service regularly under “Customer Relationship Management Program” in order to achieve the goal in making customer

satisfaction.

Home CareThink about Home, Think about HomePro

HomePro has shown of potential in being leader of Home product retail business as “One Stop Shopping” continuously,

not only for merchandising but also marketing strategy in professionally before and after sales service through Home Care

service especially for look after electric appliances and home tools service of 14 lists. HomePro also push forward by expand

strategy in service of Home Service to install, look after and repair household equipment. HomePro also enhance sending

continuously information service to home lover about products, services and new promotions.

10

Continuous

Development

10

1111

Employee DevelopmentEmployee potential development support

HomePro continuously is aware of employee potential development, for the skill in depth, knowledge of product and customer

service. This is to build a harmony working culture, to be unique of employee, to have one goal in development for strong

growth with full effi ciency and for best customer service. Besides we have expanded training service to customer in home

product usage, installation and repairing, garden decoration, feng shui (Chinese belief of how to locate a building) etc. by

themselves (Do-It-Yourself ) at HomePro.

12

Continuous

Support

12

1313

Kid‘s Toilet“Kid’s toilet” To look after society.

In 2008, HomePro continuously drove “Kid’s toilet project” with determination to improve quality of life and sanitation of toilet

usage for student. The Company supports employee to participate the project to realize of society responsibility though

applying to be a volunteer to build toilets in the school where HomePro branches are located. In 2008, HomePro has expanded

the project in 6 provinces i.e. Ayutthaya, Chiangmai, Krabi, Phuket, Songkla, Samui Island in Suratthani province. Since beginning

of project in December 2006, HomePro has operated for 49 schools in 14 provinces with over 526 toilets in total.

Save the EarthStop Global warming

Global warming is a serious problem globally which HomePro aware of and expects employee to concern about environment,

thus internal activity has conducted such as reducing power consumption campaign, by encouraging employee to use

staircase instead of using elevator. Everytime of using staircase will be recorded by counting number of trees. And then

employee volunteers “HomePro Jai-Asa” bring the gotten number of trees to grow for the king in Reforestation Project to

Honour His Majesty the King in Samutsongkram Province. Besides, employee has been supported to installation NGV by

providing employee loan to save the energy cost.

1414

15

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, American International Assurance Co., Ltd. and the Sarasin family. 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 fi rst branch of the Company operating in September

1996. As of 31 December 2008, the Company has 33 branches in total, of which 17 branches are located in Bangkok and its vicinity and

another 16 branches in upcountry provinces, which the location creates convenient access to customers. There were 3 newly

opened branches in 2008, i.e. Ayutthaya, Chiangmai - Hangdong, and Krabi.

Information of Home Product Center Public Company Limited

Location 96/27 Moo 9 Tambon Bangkhen, Amphoe Muang, Nonthaburi 11000

Telephone (66) 02-832-1000

Facsimile (66) 02-832-1400

Website www.homepro.co.th

Type of Business sale of goods and provision of complete services relating to construction,

addition, refurbishment, renovation of houses and residence places

Registration No. Bor Mor Jor. 665

Registered Capital 1,986,468,146 Shares

Paid-up Capital 1,933,610,600 Shares

G e n e r a l I n f o r m a t i o n

Information of company in which Home Product Center Plc. holds shares from 10 percent up

Name Market Village Co., Ltd

Location 234/1 Petchk asem Road, Tambon Hua Hin, Amphoe Hua Hin,

Prachaub Kirikhan Province 77110

Telephone (66) 032-61-8888

Facsimile (66) 032-61-8800

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

16

1. Rangsit 161/2 Moo 2, Phaholyothin Road, Prachathipat, Thunyaburi, Pathumthanee 12130

2. Rattanathibet 6/1 Moo 6, Tambon Saothonghin, Amphoe Bangyai, Nonthaburi 11140

3. Fashion Island 587, 589 Ramindra Road, Khannayao, Bangkok 10230

4. Future Mart 295 Rama 3 Rd., Bangkholeam, Bangkholeam, Bangkok 10120

5. Seri Center 61 Srinakarin Rd., Nongbon, Praves, Bangkok 10260

6. The Mall Bangkae 275 Moo 1, Petchkasem Rd., North Bangkae, Bangkae, Bangkok 10160

7. The Mall Korat 1242/2 Mittraphap Rd., Tambon Nai Muang, Amphoe Muang, Nakhon Ratchasima 30000

8. Ratchadaphisek 125 Ratchadaphisek Road, Dindang, Dindang, Bangkok 10320

9. Ploenchit 55 Wave Place Building, Wireless Rd., Lumpenee, Pathumwan, Bangkok 10330

10. Phuket 104 Moo 5 Tambon Rasada, Amphoe Muang, Phuket 83000

11. Chiangmai 94 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, Rama 2 Rd., 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 20260

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 (Bangna) 99/28 Moo 1, Tambon Rachatawa, Amphoe Bangplee, Samutprakarn 10540

21. Hua Hin 234/1 Petchkasem Rd., Tambon Hua-Hin, 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, Khon Kaen 40000

25. Udonthani 89/20 Moo 9, Soi Bannonglek, Tambon Markkang, Amphoe Muang, Udonthani 41000

26. Suratthani 9/1 Moo 3, Tambon Makham Tia, Amphoe Muang, Suratthani 84000

27. Petchkasem 28 Moo 11, Petchkasem Rd., Nongkhangplu , Nong Kham , Bangkok 10160

28. Chonburi 15/16 Moo 3, Tambon Huykapi, Amphoe Muang Chonburi, Chonburi 20000

29. Ekamai-Ramindra 14/12 Moo 8, Latphrao, Latphrao, Bangkok 10310

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

B r a n c h e s I n f o r m a t i o n

17

Auditor

Name Ernst & Young Offi ce Limited

Address 33rd Floor, Lake Rajada Offi ce Complex, 193/136-137 Rajadapisek Rd., Klongtoey, Bangkok 10110

Telephone (66) 02-264-0777

Facsimile (66) 02-264-0789-90

Financial Advisor

Name TMB Bank Public Company Limited

Address 3000 Phaholyothin Rd., Chomphon, Chatuchak, Bangkok 10900

Telephone (66) 02-299-2592

Facsimile (66) 02-299-2568

Legal Counsel

Name Wissen & Co Ltd.

Address 8th Floor Offi ce # 3801, BB Building, 54 Sukhumvit 21 (Asoke) Rd., Klongtoey-Nua, Wattana, Bangkok 10110

Telephone (66) 02-259-2627

Facsimile (66) 02-259-2630

Share Registrar

Name Thailand Securities Depository Co., Ltd.

Address 4th, 6-7th fl oor Stock Exchange of Thailand Building, 62 Ratchadaphisek Rd., Klongtoey, Bangkok 10110

Telephone (66) 02-229-2800

Facsimile (66) 02-359-1262-3

Representative of Debenture Holder

• Unsubordinated and Unsecured Debentures of Home Product Center Plc. 1/2005

Name Siam Commercial Bank Public Company Limited

Address 9 Ratchadapisek Rd., Jatujak, Bangkok 10900

Telephone (66) 02-230-6295

Facsimile (66) 02-230-6093

• Amortizing Debentures of Home Product Center Plc. 1/2008 and Unsubordinated and Unsecured Debentures

of Home Product Center Plc. 2/2008

Name TMB Bank Public Company Limited

Address 3000 Phaholyothin Rd., Chomphon, Chatuchak, Bangkok 10900

Telephone (66) 02-264-0777

Facsimile (66) 02-264-0789-90

I n f o r m a t i o n o f t h e R e f e r r a l s

18

Total Assets 13,369.07 12,274.28 11,813.90 13,318.38 12,225.94 11,763.88

Total Liabilities 8,412.86 7,950.81 7,975.46 8,373.62 7,908.43 7,925.81

Equity 4,956.21 4,323.48 3,838.44 4,944.76 4,317.50 3,838.06

Sales 18,540.27 15,943.28 14,223.72 18,541.73 15,943.90 14,224.33

Total Revenues 19,824.19 17,015.21 15,103.81 19,743.97 16,934.30 15,010.35

Net Profi t 959.42 710.38 600.55 953.95 704.78 598.63

Earning per Share (Baht) 0.50 0.37 0.58 0.49 0.37 0.58

Dividend per Share (Baht) - 0.18 0.12 - 0.18 0.12

Paid-up Capital (Million Shares) 1,933.61 1,924.92 1,919.82 1,933.61 1,924.92 1,919.82

Financial Ratio

Liquidity Ratio

Liquidity Ratio (time) 0.62 0.56 0.81 0.61 0.56 0.80

Profi tability Ratio

Gross Profi t (%) 23.70 22.96 22.84 23.70 22.97 22.84

Profi t from Operation (%) 8.01 7.24 7.12 7.98 7.21 7.11

Net Profi t (%) 4.84 4.17 3.98 4.83 4.16 3.99

Return on Equity (%) 20.68 17.41 18.87 20.60 17.28 18.80

Operation Effi ciency Ratio

Return on Assets (%) 7.48 5.90 5.80 7.47 5.88 5.81

Financial Analysis Ratio

Debts to Equity Ratio (time) 1.70 1.84 2.08 1.69 1.83 2.07

Interest Coverage Ratio (time) 22.35 12.36 8.95 21.91 12.19 8.68

Item

Consolidated Financial Statements Separate Financial Statements

2008 2007 2006 2008 2007 2006

Item

Consolidated Financial Statements Separate Financial Statements

2008 2007 2006 2008 2007 2006

F i n a n c i a l I n f o r m a t i o n

(Unit : Million Baht)

19

Vision To maintain as the leader of home center business in Thailand, and to increase branches to cover the home center business in

South East Asia.

Mission 1. To off er the most valuable of products, services, and prices to customers, to be the fi rst at customer’s mind on home products.

2. To cooperate with our business alliance in trying to increase effi ciency which leads to increasing of mutual benefi ts.

3. To give the importance and will develop personnel to have working effi ciency and responsibility to customers.

4. To manage professionally according to the good governance, and to create good relationship to society and community.

5. To seek for new business opportunity for the future and to create reasonable value added to interested persons.

Nature Financial Ratio re 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

residence places as 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. Selling the home improvement products, by having 3 groups

• Hard Line 1 e.g. group of construction material, home improvement accessories, bathroom and sanitary ware.

• Hard Line 2 e.g. group of kitchenware, electrical appliances, electrical equipment and lighting.

• Soft Line e.g. group of bedding and household decorative goods.

2. Providing relevant services, beginning from giving advice and information being useful to make a decision to purchase goods,

customer is capable to choose the goods and best fi ts the purpose of using. Moreover, the Company has also arranged types of

services to facilitate customer. i.e. goods delivery, installation and repairing, fi nding the contractor and expertise team, cleaning the

home appliance and sanitation utensil (Home Care), designing service for planning to decorate or improve parts of the house with

computer, computerized colour mixing, goods ordering for specifi c case, changing or returning of goods, demonstrate D.I.Y

(Do It Yourself ) and Workshop, etc.

Nature of Business of Subsidiary 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 million. Market Village was formed with objectives to manage rental space for Home Product Center Plc., and to provide

utilities services to tenants. It commenced operation on the project “Hua-Hin Market Village” which is located at Petchkasem Road, Amphoe

Hua-Hin, Prachaubkirikhan. This has been opened in the fi rst quarter of 2006.

N a t u r e o f B u s i n e s s

20

Revenue Structure Revenue of Company and subsidiaries consist of sales revenue and other revenues. Total structure of revenue can be classifi ed by the

line of products as follows:

Supply of Products The Company acquired products by:

1. Purchase order. The Company made the purchase order of products categorized by product lines in line with groups of products

from both domestic and overseas manufacturer or sales agent, which the Company mainly emphasized on quality and variety of products.

Currently, the Company acquires products from more than 800 manufacturers and sales agents which, throughout the time,

there were always 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.

2. Make to order. The Company ordered manufacturing of both Private Brand and House Brand from both domestic and over-

seas manufacturer. The Company will initially select the manufacturer by considering factors including being certifi ed of manufacturing

standard, reputation, quality of service providing and types of harmonized operation. Moreover, the Company has also visited the factory

and inspected products in order to ensure the overall quality.

Market and Competitive Condition Currently, the Company is the leader in the retail business of goods relating to housing together with the provision in full range of

complete services. As for competitors, the Company has classifi ed other operators who sell goods in similar nature as follows:

1. Operators of Home Center

• HomeWorks is a retail business unit of home products in Central Retail Corporation Group of Companies.

• Global House operates the business of selling products in the form of warehouse store. Products include construction

materials, decorative goods, tools, equipment to be used for construction, addition, decoration of house and garden. It is

managed by the Siam Global House Plc. There are currently 7 branches in operation.

1. Revenue from retailing

• Hard Line 11 7,782.2 39.3 6,792.3 39.9 6,157.7 40.8

• Hard Line 22 7,520.9 37.9 6,395.8 37.6 5,523.0 36.6

• Soft Line3 2,998.9 15.1 2,502.5 14.7 2,152.9 14.3

2. Revenue from project sales4 238.3 1.2 252.7 1.5 390.1 2.6

Total revenues from sales 18,540.3 93.5 15,943.3 93.7 14,223.7 94.2

3. Other income5 1,283.9 6.5 1,071.9 6.3 880.1 5.8

Total 19,824.2 100.0 17,015.2 100.0 15,103.8 100.0

Item

2008 2007 2006

Amount % Amount % Amount %

Remarks 1. Hard Line1 is group of construction material, home improvement accessories, bathroom and sanitary ware

2. Hard Line2 is group of kitchenware, electrical appliances, electrical equipment and lighting

3. Soft Line3 is group of bedding and household decorative goods.

4. Revenue from project sales4 is from the purchase of project owners which cannot be categorized per product lines.

5. Other income5 is revenue from rental of space, in-store promotion fee etc.

(Unit : Million Baht)

21

However, the Company believes that this business still has plenty potential and marketing opportunities and that the

increase of this business operator will stimulate the consumers to know more and more rapidly change their behavior to

purchase products from the Modern Trade as Home Center.

2. Specialty Store, such as retail businesses who focus on selling specifi c goods as follows:

• Ceramic, Sanitary ware, and Kitchen ware stores i.e. Boonthavorn, Grand Home Mart.

• Furniture and Home decoration store i.e. Index Living Mall

• Retail store that sells 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 products and

edible products, not home products. There may be some groups of products are overlap sold but having diff erent customer target.

22

R i s k F a c t o r s

The Company separately explains the risk factors which may aff ect to the operation of business as follows:

1. Business Risk In the beginning period of year 2008, the overall economic situation has slightly improved in accordance with the clearer politic

situation after the election and the forming of the government. For the fi rst half year of 2008, the domestic economy has slightly expanded,

the purchasing power of consumer has not much yet recovered, oil price and concern over rising of living cost. These have caused the

change in consumer behavior, by changing to buy cheaper products and being more careful on spending.

In the second half of the year, consuming of private sector was still stable but slowdown when compared with the fi rst half of the

year. This was a result of the increase of products prices and unstable politic situation caused by the consecutively severe congregation.

The Company has continually followed the economic and political situation in order to plan and fi nd measures and strategies to

prevent the risks that may occur, in order to be able to operate the business and to successfully reach the planned target.

1.1 Inventory

As of the 31st December 2008, 31st December 2007, and 31st December 2006, the Company had net Inventory equal of Baht

2,728.08 Million, Baht 2,547.57 Million, and Baht 2,495.68 Million respectively. The average inventory turnover periods were 67 days,

74 days, and 77 days. The decrease of inventory turnover period refl ects the success in adopting of marketing strategy and the

developing of the capability of inventory management.

However, the Company has been continuingly attempting to increase the turnover of Inventory, whether by developing of

service quality of sale persons, continual sales promotion, improving products display and internal appearance of branches, regularly

adding new products to the store, including attempting to reduce the volume storing level. For the reduction of inventory in year

2006, the Company has expanded space of the distribution center. As of 31st December 2008, the total area was 40,000 square

meters, in order to be capable to support the increase of branches in the future and to manage inventory more effi ciently.

1.2 Investment

As of 31st December 2008, the Company had branches in operation of totaling 33 branches, 3 new branches in 2008, i.e.

Ayutthaya branch, Chiangmai-Hangdong, and Krabi.Since the Company has policy to continuingly increase branches, there may

be a risk regarding the result of performance of new branches that may not be as forecasted. This will aff ect the result of the total

operation. The Company avoids the risk by analyzing the investment return before every decision making to invest, and preparing

the action plan, annual budget, and follow up the operation result and progress plan every month when the new branch has

operated. This will facilitate that the Company will be capable to set the plan to handle with the risk and to solve problems which

may be occurred in timely manner.

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 the work

unit to handle with such risk, that is 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 suff er 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 was sold products to for cash, the group of contractor and project owner is customer

who was sold products to by credit term. The major sale revenue comes from retail customer. As in year 2008 the proportion of cash

sales was 98.7% to total sales. For the year 2007 and 2006, the proportion was at 98.4% and 97.3%. It can be seen that the proportion

of credit sales of the Company has decreased overtime. However, for the credit sales, the Company will consider only project that

23

has reliable fi nancial status, which the company has analyzed the result of operation and fi nancial status or having the contractor

place with a letter of guarantee as security against debt payment, etc.

As of 31st December 2008, 31st December 2007, and 31st December 2006, the Company has accounts receivable of Baht

160.63 Million, Baht 164.37 Million, and Baht 162.09 Million, being credit card debtor of Baht 34.06 Million, Baht 48.13 Million, and

Baht 37.73 Million respectively. The allowance for doubtful bad debts was set to be approximate Baht 25.64 Million, Baht 20.79

Million, and Baht 25.24 Million, which the management have already estimated the debt repayment period and have evaluated

fi nancial status of each debtor. The Company believes that the allowance for doubtful bad debts has been set suffi ciently and

appropriately.

2. Competitive Risk The Company operates a retail business relating to houses and residential places where there are both direct and indi-

rect competitors, such as retailing shops, department stores, specialty stores, and general small retail shops. The Company has

diff erentiated itself by focusing on distribution of variety of products and provision of complete range of services for construction, repairing,

decoration, and addition. Also, the Company provides team of experts for several kinds of system work such as electrical system, plumbing,

and relating installation, etc.

Besides, the Company has been concentrated on strengthening effi ciency of internal management to support capability and

advantages against competitors both locally and internationally in the future.

3. 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

Announced on 16th May 2006, having objectives to be a guidance on the development of Bangkok Metropolis and to

support the expansion in the future. If there will be modifi cation of the town planning in the future, the Company will not be aff ected from

this limitation, because the Company had put its investment to cover almost all areas of Bangkok. It is being, on the other hand, seen that it

is a restriction to business expansion of competitor, which is a benefi t 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 Whole-

sale/Retail Business, by virtue of the Trade Competition Act B.E. 2542 into 8 ways as follows:

1. Unfair fi xing the prices.

2. Unfair requesting for economic benefi t.

3. Unfair returning of goods.

4. Unfair using 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 has aff ected 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 specifi c and clearer.

3. Draft Wholesale and Retail Business Act

The draft Wholesale and Retail Business Act which has not yet been passed the consideration of the National Legislative As-

sembly. Currently, the Wholesale/Retail observation and development Commission has been established to consider the draft Act which

is not yet clear in enforcement, but if such Act will pass the consideration there shall be an eff ect to the every big modern retail business. If

such is eff ective to the type of Company’s business, it may be useful as it limits the business expansion of new comer, and there will be only

left with the old competitors under the same legal framework.

24

S h a r e h o l d i n g S t r u c t u r e

1. Land and Houses Public Company Limited 571,865,745 29.71

2. Quality Houses Public Company Limited 401,081,274 20.84

3. American International Assurance Company Limited 97,842,182 5.08

4. Mr. Niti Osathanuklor 93,863,150 4.88

5. Thai NVDR Company Limited 80,959,265 4.21

6. Goldman Sachs International 63,689,800 3.31

7. Mr. Manit Udomkunnatum 60,619,372 3.15

8. SOMERS (UK) LIMITED 33,000,000 1.71

9. HSBC (Singapore) Nominees PTE Limited 30,004,580 1.56

10. Chase Nominees Limited 26,664,952 1.39

11. Others 465,390,102 24.18

Rank Name of natural person / Juristic Person No. of Shares % of total Paid-upshares

The List of top 10 major shareholders, as of the closing of registration 23rd April 2008, consists of:

Foreign Limit Foreign shareholders are capable to hold shares and appear their names on the Company’s asset registration of totaling not exceed-

ing 30% of the issued shares and paid up. As of 30th December 2008, the shares of the Company held by foreigner was at approximately

19%.

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. Mr. Anant Asavabhokhin Land and Houses Plc. Chairman

2. Mr. Rutt Phanijphand Quality Houses Plc. Director

3. Mr. Joompol Meesook Quality Houses Plc. Director

4. Mrs. Suwanna Buddhaprasart Quality Houses Plc. Director

5. Mr. Naporn Soonthornchitcharoen Land and Houses Plc. Director

Representative of ShareholdersName - Surname Position

25

Internal Audit Department

Senior Vice PresidentBusiness Development

Senior Vice PresidentHuman Resource and

Central Service

Senior Vice PresidentInformation Technology

Senior Vice PresidentAccounting, Treasury and Legal

Senior Vice PresidentMerchandising - Hard Line

Senior Vice PresidentMerchandising - Soft Line

Senior Vice PresidentMerchandising -

Home Electronic Product

Senior Vice PresidentInternational Purchasing

Senior Vice PresidentOperation

Senior Vice PresidentMarketing

Senior Vice PresidentDistribution Center

O r g a n i z a t i o n C h a r t

Nomination andRemuneration Committee

Board of Directors

Managing Director

Executive Directors Audit Committee

26

M a n a g e m e n t

1. Mr. Anant Asavabhokhin Chairman

2. Mr. Pong Sarasin Director

3. Mr. Rutt Phanijphand Director

4. Mr. Joompol Meesook Director

5. Mr. Apichat Natasilapa Director

6. Mrs. Suwanna Buddhaprasart Director

7. Mr. Manit Udomkunnatum Director

8. Mr. Naporn Soonthornchitcharoen Director

9. Mr. Khunawut Thumpomkul Director

10. Mr. Apilas Osatananda Independent Director

11. Mr. Thaveevat Tatiyamaneekul Independent Director

12. Mr. Chanin Roonsumran Independent Director

Remark : The board of directors’ secretary is Ms. Wannee Junthamongkol, Senior Vice President - Accounting, Treasury and Legal.

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 has totaling 12 persons, consisting of 3 Independent Directors, 1 Director who is management, and 8 Non-

Executive Directors, as follows:

Name - Surname Position

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

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 specifi ed 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.

27

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 benefi ts or other person(s) benefi ts unless it is notifi ed 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 affi liates.

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 fi rst:

• 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 fi nancial statements’ net tangible assets.

• The acquisition or disposition of core assets with value more than 50% of the latest fi nancial statements’ assets.

9. In the event of tie votes, the Chairman of the Board will have a casting vote.

Defi nition of 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 qualifi cations of the Inde

pendent Director are as follows:

1. Hold share not more than 1% of paid up capital of the Company, affi liates company, joint company, associated company,

including the shares held by the related person.

2. Being independent either directly or indirectly of both fi nancial and management of the Company or joint company or

major shareholders of the Company, and having no benefi t 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

benefi t or interest will not aff ect 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, affi liate 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.

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:

28

1. Mr. Manit Udomkunnatum Chairman of the Executive Director

2. Mr. Naporn Soonthornchitcharoen Executive Director

3. Mr. Khunawut Thumpomkul Executive Director

4. Mr. Rutt Phanijphand Executive Director

1. Mr. Apilas Osatananda Chairman of the Audit Committee

2. Mr. Thaveevat Tatiyamaneekul Audit Committee

3. Mr. Chanin Roonsumran Audit Committee

Remark : The Audit Committee’s secretary is Mr. Nitat Aroontippaitoon, Vice President – Internal Audit.

1. Death

2. Resignation

3. Lacking of qualifi cations 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 offi ce

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 qualifi ed to be

Executive Director, in order to fi ll up number of directors as stipulated in the regulations by the Board of Directors.

2.1 Audit Committee consists of:

Name - Surname

Name - Surname

Position

Position

29

Roles and Responsibilities

1. Review the fi nancial statement of the company to be appropriately made and accurate according to the Generally Accepted

Accounting Principle with suffi cient disclosure.

2. Review that the Company has proper and effi cient 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 transaction or transaction that may have confl ict of interest to be in compliance with relevant laws

and regulations.

5. Review that the Company has proper and effi ciency risk management system.

6. Review and jointly consider with the auditor the fi nancial 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 unit, also approve the appointment, relocation and termination of employment, in

cluding to consider result of annual performance of the chief of internal audit.

9. Consider and approve regulations of internal audit offi ce.

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 environment

of organization.

14. Carry on examination of the matters notifi ed by the auditor of the Company. In case the auditor fi nds doubtful be havior that the

director, manager or person who is responsible for the operation of the Company has committed an off ence as stipulated in the

Securities and Stock Exchange Act (The 4th Issue) B.E. 2551, and report the result of preliminary examination to the Offi ce of the

Securities Exchange Commission and auditor of the Company within 30 days from the date receiving notifi cation from the auditor.

15. Perform any other act as stipulated by law or the Board of Directors of the Company 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 of the Company, 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 fi nancial report of the Company.

16.2 Opinion in relation to suffi ciency 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 confl ict 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 offi ce

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

30

1. Mr. Rutt Phanijphand Chairman of the Nomination and Remuneration Committee

2. Mr. Chanin Roonsumran Nomination and Remuneration Committee

3. Mr. Apichat Natasilapa Nomination and Remuneration Committee

Remark : The Nomination and Remuneration Committee’s secretary is Mr. Thee Phromphol, Senior Vice President – Human Resource and Central Service.

3.3 Resignation

3.4 Death

3.5 Lacking of qualifi cation 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 to acknowledge.

5. In case of any vacancy other than by rotation, the Board of Director shall appoint person who is qualifi ed to be an Audit

Committee in order to fi ll 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 for acknowledgement.

2.3 Nomination and Remuneration Committee consists of:

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 benefi ts 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 benefi ts concerning duty and responsibility of the Managing Director

including consider the criterions and evaluation of operation in order to determine annual remuneration from the operation.

5. Review the structure of criterions of remuneration on items 3 and 4 to fi t with duty, responsibility, operation result of the Company,

and harmonized with market condition.

6. Consider salary budget, annual merit increase and annual reward, welfare, including other benefi ts 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 offi ce

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.

Name - Surname Position

31

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.

3. In case of any vacancy other than by rotation, the Board of Director shall appoint person who is qualifi ed to be the Nomination and

Remuneration Committee, in order to fi ll up the number as stipulated in the regulations by the Board of Directors.

Selection of Directors

The Company appointed the Nomination and Remuneration Committee to determine selection of appropriate person to be nomi-

nated as the Director or Managing Director, by considering persons who have knowledge, capability and experience as required by the

Company, and must not have the prohibited qualifi cation under the rules of the Securities Exchange Commission and Stock Exchange of

Thailand, the relevant laws, rules or other regulations., upon approval, the Nomination and Remuneration Committee will propose to the

Shareholders Meeting in order to be adopted for the appointing as the Directors of the Company.

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 2008, there were 4 Directors who must be retired by rotation as follows: 1. Mr. Anant Asavabhokhin 2. Mr. Pong Sarasin 3. Mr. Khu-

nawut Thumpomkul and 4. Mr. Apichat Natasilapa. The Nomination and Remuneration Committee’s Meeting no. 1/2551 on 7th February

2008, having considered the qualifi cation, experience and capability, and the past performance, proposed to re-appoint all 4 directors as the

Directors of the Company, to the Board of Directors of the Company. And then in the annual general shareholders meeting of year 2008, the

meeting has resolution to re-appoint all directors to their positions for another term.

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 cover 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.

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 au

thority, 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 specifi c work, which must be under the rules, regulations, or

order that the Board of Directors or as imposed by the Company.

32

1. Mr. Khunawut Thumpomkul Managing Director

2. Mr. Vathunyu Visuthikosol Senior Vice President Business Development

3. Mr. Anuchar Jitjaturunt Senior Vice President Merchandising - Hard Line

4. Ms. Jarusopha Thumkathikanon Senior Vice President Merchandising - Soft Line

5. Ms. Tharathip Trimankhong Senior Vice President International Purchasing

6. Mr. Weerapun Ungsumalee Senior Vice President Operation

7. Mr. Thee Phromphol Senior Vice President Human Resource and Central Service

8. Ms. Jariya Sorathorn Senior Vice President Merchandising - Home Electric Products

9. Mr. Nat Jarlitchana Senior Vice President Marketing

10. Mr. Chaiyuth Karunyasopon Senior Vice President Distribution Center

11. Mr. Hanchai Laowpanitchakorn Senior Vice President Information Technology

12. Ms. Wannee Juntamongkol Senior Vice President Accounting, Treasury and Legal

Name - Surname Position Department

However, the Managing Director is unable to approve transaction that himself or person who may have confl ict of interest in any

other ways with the Company or its subsidiary.

Secretary of the Company

On 20th March 2008, the Board of Directors has resolution to appoint Ms. Wannee Juntamongkol as the Secretary of the Company

in order to comply with the “Securities and Stock Exchange Act (4th Issue) B.E. 2551”. The Company has already notifi ed the name and place

to retain documents of the Company to the Securities and Exchange Commission on 26th August 2008.

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

closely report the result of such operation.

3. 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.

4. Maintain the report on interests which have been reported by the directors or executives.

5. Manage other matters as stipulated by the Capital Market Supervisory Board.

3. Management consists of:

33

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e B

oar

d o

f D

ire

cto

rs

Qu

alit

y C

on

stru

ctio

n P

rod

uct

s P

lc.

Co

nst

ruct

ion

Su

pp

lies

Ch

ula

lon

gko

rn U

niv

ers

ity

Ban

gko

k C

hai

n H

osp

ital

Plc

. H

osp

ital

-

Dir

ect

or

Ce

rtifi

cati

on

Pro

gra

m

19

85

- P

rese

nt

Ch

airm

an o

f th

e B

oar

d o

f D

ire

cto

rs

Lan

d a

nd

Ho

use

s P

lc.

Pro

pe

rty

De

velo

pm

en

t

(DC

P)

20

04

and

Ch

ief

Exe

cuti

ve O

ffi c

er

1

98

3 -

Pre

sen

t D

ire

cto

r Q

ual

ity

Ho

use

s P

lc.

Pro

pe

rty

De

velo

pm

en

t

81

-

Ph

.D. (

Ho

n.)

Bu

sin

ess

Ad

min

istr

atio

n

0.2

2

- 1

99

5 -

Pre

sen

t D

ire

cto

r H

om

e P

rod

uct

Ce

nte

r P

lc.

Re

tail

Ho

me

Imp

rove

me

nt

C

hu

lalo

ng

korn

Un

ive

rsit

y

2

00

0 -

Pre

sen

t C

hai

rman

of T

he

Bo

ard

of

Dir

ect

or

Thai

Nam

thip

Ltd

. C

arb

on

ate

d s

oft

dri

nk

1

99

6 -

Pre

sen

t C

hai

rman

of T

he

Bo

ard

of

Dir

ect

or

Shan

gri

-La

Ho

tel P

lc.

Ho

tel

Dir

ect

or

Tara

rom

En

terp

rise

Plc

. P

rop

ert

y d

eve

lop

me

nt

1

99

4 -

Pre

sen

t D

ire

cto

r Q

ual

ity

Co

nst

ruct

ion

Pro

du

cts

Plc

. C

on

stru

ctio

n S

up

plie

s

R

oja

na

Ind

ust

rial

Par

k P

lc.

Pro

pe

rty

de

velo

pm

en

t

Sa

mm

ako

rn P

lc.

Pro

pe

rty

de

velo

pm

en

t

1

99

0 -

Pre

sen

t D

ire

cto

r C

row

n s

eal

Plc

. C

row

n c

ap m

anu

fact

uri

ng

Dir

ect

or

Asi

an P

rop

ert

y D

eve

lop

me

nt

Plc

. P

rop

ert

y d

eve

lop

me

nt

61

-

M.S

. in

Bu

sin

ess

Ad

., -

- 2

00

1 -

Pre

sen

t D

ire

cto

r,

Ho

me

Pro

du

ct C

en

ter

Plc

. R

eta

il H

om

e Im

pro

vem

en

t

F

ort

Hay

s K

ansa

s St

ate

Un

ive

rsit

y,

C

hai

rman

of

the

No

min

atio

n

H

ays,

Kan

sas,

USA

.

and

Re

mu

ne

rati

on

Co

mm

itte

e

-

Bac

he

lor

De

gre

e o

f Sc

ien

ce

an

d E

xecu

tive

Dir

ect

or

K

ase

tsar

t U

niv

ers

ity

20

06

- P

rese

nt

Dir

ect

or

and

Au

dit

Co

mm

itte

e

IRP

C P

lc.

Petr

och

em

ical

- T

hai

Inst

itu

te o

f D

ire

cto

rs A

sso

ciat

ion

2

00

5 -

Pre

sen

t D

ire

cto

r

Lan

d a

nd

Ho

use

Ban

k R

eta

il P

lc.

Fin

anci

al in

stit

uti

on

D

ire

cto

r A

ccre

dit

atio

n P

rog

ram

and

Ch

ief

Exe

cuti

ve D

ire

cto

r

(

DA

P)

20

03

Ind

ep

en

de

nt

Dir

ect

or

Ban

pu

Plc

. En

erg

y

- T

hai

Inst

itu

te o

f D

ire

cto

rs A

sso

ciat

ion

2

00

1 -

Pre

sen

t D

ire

cto

r P

resi

de

nt

Q

ual

ity

Ho

use

s P

lc.

Pro

pe

rty

De

velo

pm

en

t

D

ire

cto

r A

ccre

dit

atio

n P

rog

ram

and

Ch

ief

Exe

cuti

ve O

ffi c

er

(

DC

P)

20

05

Dir

ect

or

Q.H

. In

tern

atio

nal

Co

., Lt

d. (

BV

I) O

vers

eas

pro

pe

rty

de

velo

pm

en

t

2

00

4 -

20

05

Ex

ecu

tive

Dir

ect

or

Kru

ng

Th

ai B

ank

Plc

. Fi

nan

cial

inst

itu

tio

n

2

00

3 -

20

04

A

ud

it C

om

mit

tee

** A

t th

e p

rese

nt,

Mr.

An

ant

is

th

e d

ire

cto

r o

f 5

list

ed

co

mp

anie

s

an

d 5

no

n-l

iste

d c

om

pan

ies

wh

ich

ar

e n

ot

do

ing

bu

sin

ess

co

mp

leti

ng

w

ith

th

e C

om

pan

y.

** A

t th

e p

rese

nt,

Mr.

Pon

g is

th

e d

ire

cto

r o

f 7

list

ed

co

mp

anie

s

an

d 7

no

n-l

iste

d c

om

pan

ies

wh

ich

ar

e n

ot

do

ing

bu

sin

ess

co

mp

leti

ng

w

ith

th

e C

om

pan

y.

** A

t th

e p

rese

nt,

Mr.

Ru

tt is

th

e d

ire

cto

r o

f 4

list

ed

co

mp

anie

s

an

d 2

no

n-l

iste

d c

om

pan

ies

wh

ich

ar

e n

ot

do

ing

bu

sin

ess

co

mp

leti

ng

w

ith

th

e C

om

pan

y.

Nam

e - S

urna

me

Age

Prop

or-

tiona

lof

sha

re in

Com

pany

%

Fam

ilyre

latio

nshi

p w

ithth

e m

anag

e-m

ent

Mr.

An

ant

Asa

vab

ho

khin

Ch

airm

an

Mr.

Pon

g S

aras

in

Dir

ect

or

Mr.

Ru

tt P

han

ijph

and

Dir

ect

or

Exe

cuti

ve D

ire

cto

r

and

Ch

airm

an o

f th

e N

om

inat

ion

and

Re

mu

ne

rati

on

Co

mm

itte

e

B O

A R

D O

F D

I R E

C T

O R

S I

N F

O R

M A

T I O

N A

S O

F D

E C

E M

B E

R 3

1 ,

2 0

0 8

34

Dur

ing

Posi

tion

Expe

rienc

e in

5 y

ears

Educ

atio

nCo

mpa

ny N

ame

Type

of B

usin

ess

Nam

e - S

urna

me

Age

Prop

or-

tiona

lof

sha

re in

Com

pany

%

Fam

ilyre

latio

nshi

p w

ithth

e m

anag

e-m

ent

59

-

MB

A

Tham

mas

at U

niv

ers

ity

0.0

3

- 1

99

5 -

Pre

sen

t D

ire

cto

r H

om

e P

rod

uct

Ce

nte

r P

lc.

Re

tail

ho

me

ce

nte

r

-

BS.

AR

CH

, F.E

.U.,

Ph

ilip

pin

es

20

04

- P

rese

nt

Dir

ect

or

Q-C

on

Eas

tern

Co

., Lt

d

Co

nst

ruct

ion

su

pp

lies

man

ufa

ctu

rin

g

-

BS.

CE,

F.E

.U.,

Ph

ilip

pin

es

20

02

- P

rese

nt

Dir

ect

or

Ce

ntr

e P

oin

t M

anag

em

en

t C

o.,

Ltd

B

uild

ing

man

age

me

nt

- T

hai

Inst

itu

te o

f D

ire

cto

rs A

sso

ciat

ion

1

99

7 -

Pre

sen

t D

ire

cto

r Q

.H. I

nte

rnat

ion

al C

o.,

Ltd

(B

VI)

Ove

rse

as p

rop

ert

y d

eve

lop

me

nt

D

ire

cto

r A

ccre

dit

atio

n P

rog

ram

Dir

ect

or

Har

bo

urv

iew

Co

., Lt

d

Ho

tel i

n o

vers

eas

(

DA

P)

20

04

1

99

4 -

Pre

sen

t D

ire

cto

r Q

ual

ity

Co

nst

ruct

ion

Pro

du

cts

Plc

. C

on

stru

ctio

n s

up

plie

s m

anu

fact

uri

ng

Dir

ect

or

Cas

a C

o.,

Ltd

. P

rop

ert

y d

eve

lop

me

nt

1

99

2 -

Pre

sen

t D

ire

cto

r Q

.H M

anag

em

en

t C

o.,

Ltd

P

rop

ert

y d

eve

lop

me

nt

1

98

8 -

Pre

sen

t D

ire

cto

r

Qu

alit

y H

ou

se P

lc.

Pro

pe

rty

de

velo

pm

en

t

and

Ad

viso

r o

f P

resi

de

nt

and

Ch

ief

Exe

cuti

ve D

ire

cto

r

51

-

MB

A,

- -

20

01

- P

rese

nt

Dir

ect

or

and

No

min

atio

n

Ho

me

Pro

du

ct C

en

ter

Plc

. R

eta

il H

om

e Im

pro

vem

en

t

U

niv

ers

ity

of

Sou

the

rn C

alifo

rnia

and

Re

mu

ne

rati

on

Co

mm

itte

e

- T

hai

Inst

itu

te o

f D

ire

cto

rs A

sso

ciat

ion

1

99

9 -

Pre

sen

t D

ire

cto

r A

IGG

IC (

Thai

lan

d)

Ltd

. In

vest

me

nt

con

sult

ant

D

ire

cto

r A

ccre

dit

atio

n P

rog

ram

(

DA

P)

20

04

53

-

MB

A

Ch

ula

lon

gko

rn U

niv

ers

ity

- -

20

03

- P

rese

nt

Dir

ect

or

Ho

me

Pro

du

ct C

en

ter

Plc

. R

eta

il H

om

e Im

pro

vem

en

t

- T

hai

Inst

itu

te o

f D

ire

cto

rs A

sso

ciat

ion

2

00

5 -

Pre

sen

t D

ire

cto

r La

nd

an

d H

ou

se R

eta

il B

ank

Plc

. Fi

nan

cial

inst

itu

tio

n

D

ire

cto

r A

ccre

dit

atio

n P

rog

ram

2

00

3 -

Pre

sen

t D

ire

cto

r Q

.H M

anag

em

en

t C

o.,

Ltd

O

vers

eas

Pro

pe

rty

De

velo

pm

en

t

(

DA

P)

20

04

2

00

0 -

Pre

sen

t D

ire

cto

r C

en

tre

Po

int

Man

age

me

nt

Co

., Lt

d

Bu

ildin

g M

anag

em

en

t

Dir

ect

or

Q.H

. In

tern

atio

nal

Co

., Lt

d

Pro

pe

rty

De

velo

pm

en

t

Dir

ect

or

and

Se

nio

r Vic

e P

resi

de

nt

Qu

alit

y H

ou

se P

lc.

Pro

pe

rty

De

velo

pm

en

t

** A

t th

e p

rese

nt,

Mr.

Joo

mp

ol i

s

th

e d

ire

cto

r o

f 3

list

ed

co

mp

anie

s

an

d 7

no

n-l

iste

d c

om

pan

ies

wh

ich

ar

e n

ot

do

ing

bu

sin

ess

co

mp

leti

ng

w

ith

th

e C

om

pan

y.

** A

t th

e p

rese

nt,

Mr.

Ap

ich

at is

th

e d

ire

cto

r o

f 1

list

ed

co

mp

any

an

d 2

no

n-l

iste

d c

om

pan

ies

wh

ich

ar

e n

ot

do

ing

bu

sin

ess

co

mp

leti

ng

w

ith

th

e C

om

pan

y.

** A

t th

e p

rese

nt,

Mrs

. Su

wan

na

is

th

e d

ire

cto

r o

f 2

list

ed

co

mp

anie

s

an

d 6

no

n-l

iste

d c

om

pan

ies

wh

ich

ar

e n

ot

do

ing

bu

sin

ess

co

mp

leti

ng

w

ith

th

e C

om

pan

y.

Mr.

Joo

mp

ol

Me

eso

ok

Dir

ect

or

Mr.

Ap

ich

at N

atas

ilpa

Dir

ect

or

and

No

min

atio

n

and

Re

mu

ne

rati

on

Co

mm

itte

e

Mrs

. Su

wan

na

Bu

dd

hap

rasa

rt

Dir

ect

or

35

Dur

ing

Posi

tion

Expe

rienc

e in

5 y

ears

Educ

atio

nCo

mpa

ny N

ame

Type

of B

usin

ess

Nam

e - S

urna

me

Age

Prop

or-

tiona

lof

sha

re in

Com

pany

%

Fam

ilyre

latio

nshi

p w

ithth

e m

anag

e-m

ent

63

-

Seco

nd

ary

3.1

6

- 2

00

0 -

Pre

sen

t D

ire

cto

r an

d

Ho

me

Pro

du

ct C

en

ter

Plc

. R

eta

il H

om

e Im

pro

vem

en

t

- T

hai

Inst

itu

te o

f D

ire

cto

rs A

sso

ciat

ion

Ch

airm

an

D

ire

cto

r A

ccre

dit

atio

n P

rog

ram

of

the

Exe

cuti

ve C

om

mit

tee

(

DA

P)

20

04

2

00

4 -

Pre

sen

t D

ire

cto

r L.

U. K

. Co

.,Ltd

. M

anag

em

en

t Se

rvic

e

2

00

3 -

Pre

sen

t D

ire

cto

r R

. L. P

. Co

.,Ltd

. H

old

ing

2

00

2 -

Pre

sen

t D

ire

cto

r P

hu

ket

Re

sort

Clu

b C

o.,

Ltd

. H

ote

l

Dir

ect

or

Ph

uke

t Pa

ton

g C

lub

Co

.,Ltd

. H

ote

l

2

00

1 -

Pre

sen

t C

hai

rman

U

SI H

old

ing

Co

.,Ltd

. H

old

ing

of

the

Exe

cuti

ve C

om

mit

tee

Dir

ect

or

Than

ano

nse

e C

o.,

Ltd

H

old

ing

2

00

0 -

Pre

sen

t D

ire

cto

r R

ang

sit

Pla

za C

o.,

Ltd

D

ep

artm

en

t St

ore

74

-

Ph

.D. I

n A

gri

cult

ura

l Te

chn

olo

gy

- -

20

01

- P

rese

nt

Ind

ep

en

de

nt

Dir

ect

or

an

d

Ho

me

Pro

du

ct C

en

ter

Plc

. R

eta

il H

om

e Im

pro

vem

en

t

- T

hai

Inst

itu

te o

f D

ire

cto

rs A

sso

ciat

ion

Ch

airm

an o

f th

e A

ud

it C

om

mit

tee

D

ire

cto

r A

ccre

dit

atio

n P

rog

ram

1

99

6 -

Pre

sen

t C

hai

rman

To

kyo

Le

asin

g

Leas

ing

(

DA

P)

20

04

51

-

MB

A

Nat

ion

al In

stit

ute

of

1.3

5

- 1

99

5 -

Pre

sen

t D

ire

cto

r, E

xecu

tive

Dir

ect

or

H

om

e P

rod

uct

Ce

nte

r P

lc.

Re

tail

Ho

me

Imp

rove

me

nt

De

velo

pm

en

t A

dm

inis

trat

ion

and

Man

agin

g D

ire

cto

r

- T

hai

Inst

itu

te o

f D

ire

cto

rs A

sso

ciat

ion

Dir

ect

or

Ce

rtifi

cati

on

Pro

gra

m

(DC

P)

20

01

50

-

MB

A

Tham

mas

art

Un

ive

rsit

y -

- 1

99

5 -

Pre

sen

t D

ire

cto

r an

d E

xecu

tive

Dir

ect

or

Ho

me

Pro

du

ct C

en

ter

Plc

. R

eta

il H

om

e Im

pro

vem

en

t

-

Bac

he

lor

of

Civ

il En

gin

ee

rin

g

20

05

- P

rese

nt

Dir

ect

or

Lan

d a

nd

Ho

use

Ban

k R

eta

il P

lc.

Fin

anci

al in

stit

uti

on

Ch

ian

gm

ai U

niv

ers

ity

20

02

- P

rese

nt

Dir

ect

or

and

Se

nio

r Vic

e P

resi

de

nt

La

nd

an

d H

ou

se P

lc.

Pro

pe

rty

de

velo

pm

en

t

- T

hai

Inst

itu

te o

f D

ire

cto

rs A

sso

ciat

ion

1

99

5 -

Pre

sen

t D

ire

cto

r La

nd

an

d H

ou

se N

ort

h-E

ast

Co

.,Ltd

. P

rop

ert

y d

eve

lop

me

nt

Dir

ect

or

Ce

rtifi

cati

on

Pro

gra

m

D

ire

cto

r La

nd

an

d H

ou

se N

ort

h C

o.,L

td.

Pro

pe

rty

de

velo

pm

en

t

(DC

P)

20

05

1

99

5 -

20

04

D

ire

cto

r A

sse

ts P

lus

Secu

riti

es

Plc

. M

utu

al f

un

d

- T

hai

Inst

itu

te o

f D

ire

cto

rs A

sso

ciat

ion

1

99

4 -

Pre

sen

t D

ire

cto

r Q

ual

ity

Co

nst

ruct

ion

Pro

du

cts

Plc

. C

on

stru

ctio

n s

up

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S O

F D

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E M

B E

R 3

1 ,

2 0

0 8

38

1. Mr. Anant Asavabhokhin Chairman of the Board of Directors -

2. Mr. Pong Sarasin Director -

3. Mr. Rutt Phanijphand Director, Executive Director and Chairman of -

the Nomination and Remuneration Committee

4. Mr. Joompol Meesook Director -

5. Mr. Apichat Natasilpa Director and Nomination and Remuneration Committee -

6. Mrs. Suwanna Buddhaprasart Director -

7. Mr. Manit Udomkunnatum Director and Chairman of the Executive Directors -

8. Mr. Naporn Soonthornchitcharoen Director and Executive Director -

9. Mr. Khunawut Thumpomkul Director, Executive Director and Chairman of

Managing Director the Board of Directors

10. Mr. Apilas Osatananda Independent Director and Chairman of Audit Committee -

11. Mr. Thaveevat Tatiyamaneekul Independent Director and Audit Committee -

12. Mr. Chanin Roonsumran Independent Director, Audit Committee and -

Nomination and Remuneration Committee

13. Mr. Vathunyu Visuthikosol Senior Vice President Director

14. Mr. Anuchar Jitjaturunt Senior Vice President -

15. Ms. Jarusopha Thumkathikanon Senior Vice President -

16. Ms. Tharathip Trimankhong Senior Vice President -

17. Mr. Weerapun Ungsumalee Senior Vice President -

18. Mr. Thee Phromphol Senior Vice President Director

19. Ms. Jariya Sorathorn Senior Vice President -

20. Mr. Nat Jarlitchana Senior Vice President -

21. Mr. Chaiyuth Karunyasopon Senior Vice President -

22. Mr. Hanchai Laowpanitchakorn Senior Vice President -

23. Ms. Wannee Juntamongkol Senior Vice President Director

Detail of Directors and Management who are Authorized to Control Subsidiary

Remuneration for the Directors and the Executives 1. Remuneration for the Directors

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 other

special directors, i.e. Audit Committee Meeting, Executive Committee Meeting, Nomination and Remuneration Committee Meeting.

On 9th April 2008, the Shareholders Meeting of 2008 has a resolution to grant the annual remuneration of not exceeding Baht

10 million and bonus to the directors of not exceeding Baht 3.5 million. Detail of remuneration payment is as follows:

1. Monthly Remuneration

• Chairman Baht 70,000 / person / month

• Director Baht 35,000 / person / month

2. Remuneration for Meeting

• Chairman Baht 25,000 / person / attendance

• Director Baht 15,000 / person / attendance

3. Remuneration for Meeting of the sub-committee*

• Chairman Baht 25,000 / person / attendance

• Director Baht 15,000 / person / attendance

Remark : The Remuneration of the sub-committee is paid for each time only when attending the meeting

Market Village Co., Ltd. Home Product Center Plc.Name - Surname

39

1. Mr. Anant Asavabhokhin 1,140,000 - - - 538,462 1,678,462

2. Mr. Pong Sarasin 570,000 - - - 269,231 839,231

3. Mr. Rutt Phanijphand 600,000 135,000 - 75,000 269,231 1,079,231

4. Mr. Joompol Meesook 585,000 - - - 269,231 854,231

5. Mr. Apichat Natasilapa1 570,000 - - 45,000 269,231 884,231

6. Mrs. Suwanna Buddhaprasart 570,000 - - - 269,231 839,231

7. Mr. Manit Udomkunnatum 600,000 200,000 - - 269,231 1,069,231

8. Mr. Naporn Soonthornchitcharoen 600,000 135,000 - - 269,231 1,004,231

9. Mr. Khunawut Thumpomkul 2 600,000 135,000 - - 269,231 1,004,231

10. Mr. Apilas Osatananda 585,000 - 300,000 - 269,231 1,154,231

11. Mr. Thaveevat Tatiyamaneekul 600,000 - 180,000 - 269,231 1,049,231

12. Mr. Chanin Roonsumran 600,000 - 180,000 45,000 269,231 1,094,231

Total 7,620,000 605,000 660,000 165,000 3,500,000 12,550,000

Remarks : 1. Mr. Apichat Natasilapa, an authorized person of the American International Assurance Company Limited, received remuneration in the name

the American International Assurance Company Limited.

2. 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.

Remark : Number of branches show total numbers of branches in operation and branches that are to be operated

Number of Employees 31 Dec. 2008 31 Dec. 2007 31 Dec. 2006

Head Offi ce (persons) 1,232 1,174 1,041

Branches (persons) 3,662 2,838 2,756

Total (persons) 4,894 4,012 3,797

Number of Branches 35 32 29

Name – Surname Total (Baht)

Meeting Allowances

Board of Director

Executive Director

Audit Committee

Nomination and Remuneration

Committee

Pension

2. Remuneration for the Executives

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 2007 and 2008 consisted of salary, bonus, and other remunerations for the total amount

of Baht 41.5 million and Baht 45.2 million respectively. Moreover, the Executives of the Company have also received other remunerations

in form of warrant to buy ordinary shares of the Company.

Human Resources Detail of numbers of employee during year 2006-2008.

On December 31, 2008, the Company had a total of 4,894 permanent employees with related expenses of Baht 1,272.30 Million.

40

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 effi ciently and eff ectively 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 cover-

ing 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 www.homepro.co.th/ir/investor_th.html

1. Rights of Shareholders The Board of Directors of the Company gives the importance to the right of shareholders by not performing any act that violates or

lessens the rights, and to facilitate the exercise of rights on various matters. It is then the guideline of operation is set in order to ensure that

shareholders that they will be protected under the basic rights as follows:

• The Company gives an opportunity to the shareholders to propose agenda and propose the name list to be appointed as

directors, including to pass question about the Company in the shareholders meeting in advance, which the company has

notifi ed the rules and supplementary documents on the web site of the Company since 20th December 2007. However,

shareholders may submit such question until 30th January 2008.

• The Company has delivered the notice calling for the meeting with information, documentation supplement to each agenda

with proxy to shareholders 7 days 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 the shareholders are unable to attend the meeting, they may give proxy to the Independent Directors in casting the vote

instead or may indicate their own vote. In 2008, the Company has arranged for Mr. Chanin Runsamran to be the proxy director.

• 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.

• After the meeting, the Company will notify the meeting minutes to the Stock Exchange of Thailand (SET) within the time frame

specifi ed by the SET, together with detail of voting result in each agenda. Generally, the meeting minutes will be reported to the

SET within 14 days and also publicized it on web site of the Company.

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.

The Company has policy to prevent the use of inside information which is prescribed in the ethic handbook, and has disclosed to

staff , executive, and director of the Company. The policy and method to control executive in private use of internal information of the Com-

pany are as follows:

• Provide knowledge to 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 executive to report the change of securities holding to the Offi ce of 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 notifi ed to the executive to restrain from the purchase and sale of securities of the Company 1 month before

disclosing of fi nancial statements or inside information to the public, and the disclosure of material information to other person

is not allowed and such has been notifi ed via e-mail every quarter.

C o r p o r a t e G o v e r n a n c e

41

However, if there is the violation of regulations mentioned above, the Company will proceed with discipline punishment as

appropriate as the case may be.

3. Roles of Stakeholders The Company has stipulated the regulations for the interest person in the “Handbook of Business Ethic” of the Company 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 strengthen cooperation with the

interest person in each groups in order to be able to ensure business sustainability with the fair benefi ts to all parties, in order to build the

long-term success.

Shareholders Shareholders and interest person may fi le complaint, or communicate or notify matters relating to the Company through the

director or audit committee at www.homepro.co.th/ir/investor_th.html

• 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.

• Communication with the Audit Committee. In case requiring for fi ling complaint in relation to violation of laws or

ethics, accounting doubt, internal controlling, etc. Such information shall be sent to the offi ce of internal audit of the

Company in order to be compiled and proposed to the Audit Committee for further consideration.

Business Partner

The Company complies with the Trade Competition Act according to the resolution of the Trade Competition Commission in year

2006, announced to be as Guideline for Unfair Trade Practices in the Wholesale/Retail Business by virtue of the Trade Competition Act

B.E. 2542.

To be able to operate business according to the above announcement, the Company has mutually agreed with business partner

to amend the provision of the agreement to be more specifi c and clearer.

Staff The Company realizes that staff is an important factor for the success of business operation. The Company then has policy of

fair treatment in providing opportunity, appointment and removal, and development of capability which since the past the

Company has treated its staff as follows:

1. The Company has fairly given remuneration and welfares e.g. annual health check up, cost of medical care, clothes, and

recreational activities i.e. internal sport activity, arranging of merit making on the birthday month, and etc.

2. Establishing the Provident Fund

3. The Company gives the importance to the developing of knowledge, all kind of capabilities of staff for knowledge on

products, standard on work performing, providing service, management, including attitude and team work. The Company

has promoted its staff as follows:

• Allocating budget in personnel development for the amount of 2% of the total salary of the Company

• Set up the DIY workshop center, having knowledge skilled expert and in each group of products.

• Set up Learning Center to each branch for new staff for self learning

• Having the Individual Development Program in order to develop personnel as the Talent Group to be promoted to the

higher position, to be ready to support the expansion of the Company.

• Promote the personnel to pursue education in the bachelor and master degree, and set up scholarship for studying

English language in order to increase effi ciency of personnel to be able to perform their work more eff ectively.

4. Giving opportunity to staff to express opinion or complain on unjust issues via e-mail to the Managing Director.

42

Customer The Company aims to operate business on the basis of highest satisfactory of customer and in order to operate according to the

objectives, the Company has policy and procedures to customer as follows:

1. Strictly deliver goods and provide service under the conditions as agreed with customer. In case of the inability to comply

with the conditions, the Company will notify customer in order to fi nd the solution.

2. Giving information and suggestion about the products and services, including relevant commercial terms correctly,

completely, not exaggeratedly which may cause misunderstanding to the customer.

3. Giving opportunity for customer to suggest or complain about the products and services, including servicing of staff or any

inconvenience that customer has experienced via website; www.homepro.co.th/cs/ccm.asp

Community, Society, and Environment The Company has policy to support social activity by creating the project to support the activity that may benefi t the

community and society as follows:

1. Computer Laboratory Project. To create opportunity for primary school student in learning through internet which have

been delivered for 3 provinces totaling of 4 schools.

2. School Kid’s Toilet. Project. The Company has joined with business partner to build and develop hygienic condition of

toilet for the remote schools in upcountry, and foster the correct direction of use. Up to 2008, the Company has built toilets

in 12 provinces 49 schools totaling 526 bathrooms.

The Company has planned to complete both projects in every province the Company has branches.

The Company also concerns about the safety on working of the staff . The Company has given additional knowledge about

safety for fi re, chemical, electricity or other danger that may be occurred while working, which has covered more than that has been

prescribed by law.

For the environment, the Company has the ventilation system and waste water treatment which have been better than the

standard, regulations stipulated by law, and has given knowledge and arranged activity to promote the economical use of natural

resources to the staff .

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 fi nancial reports and material information that

aff ect the value of the Company’s Securities which will be disclosed through the publication of the Stock Exchange of Thailand and web site

of the Company.

The Company has the Investor Relationship offi ce 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 ir@homepro.co.th. Furthermore, the

Company has also specifi ed the opportunity to communicate and activities between shareholders, investors and high rank executive of the

Company, apart from the Annual Shareholders Meeting as follows:

Web site The Company has presented the operational result, annual report, annual transactions information

56-1 form, minutes of shareholders meeting, news about the Company, news notifi ed 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 qualifi cation to be the director

before the Company will send a notice calling for the meeting through web site.

43

Analyst meeting 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 2008.

One on One meeting The Company has arranged for the shareholders and institution investors from overseas to meet as One

and Company visit on One meeting for business activities totaling 42 times.

Moreover, the Company also has the project to take the group of shareholders, retail investors, group of

young investors under the program of the Stock Exchange and analyst to visit, to understand the busi

ness operation of the Company.

Road show In 2008, the Company has met the investors outside the offi ce for both domestic and abroad as follows:

1. Having met foreign investors as arranged by Financial Institution in Thailand twice.

2. Meeting with institution investors of both domestic and international as arranged by the Stock

Exchange in the Thailand Focus event once.

3. Joining the Conference and road show and having met with foreign institution investors in

Singapore and Hong Kong for 3 times.

Making statement The Company has made the press conference twice about the annual report on business operation of

and relationship year 2007 and direction to operate business in 2008, and report the result of operation for the fi rst 6

with the media. months of 2008 to the media, and at the same time, the Company has as well prepared the Press Release

for the media.

And for the past year, the Company has arranged for the special interview with the executive twice,

through the Money Channel in relation to the total tendency of business operation of the Company.

5. Board Responsibilities Board of Directors of the Company consists of 12 persons as follows:

1. Directors who are Executive Director for 4 persons.

2. Directors who are Non-Executive Director for 5 persons.

3. Independent Directors and Audit Committee for 3 persons.

• Responsibilities The Board of Directors has participated in determining the Company’s policy, goal, business plan, and budget of the

Company, as well as ensuring that the management has operated according to the plan and budget with effi ciency and

eff ectiveness. The Chairman of the Company, President of Executive Committee, and Managing Directors of the Company are not

the same persons. Moreover, there are obviously separation of roles and duty to control 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, suffi ciency of

the disclosure of information and the reliability of fi nancial report, Corporate Governance and internal control of the Company which

have details of obligations as specifi ed in “Clause 9 management of duty of the Audit Committee”.

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.

44

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 benefi ts which is fair and reasonable and present to the shareholders

meeting for consideration.

To promote every parties 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 giving knowledge in the business of the Company to the new Director

The Company has policy to provide the fi rst orientation for the new directors, in order to acknowledge the roles, duty, and

responsibility, including giving knowledge, understanding of business and operating in any part of the Company, which is to

prepare the readiness to perform duty of the Directors.

Due to the Company has no new Directors in 2008, there was no arrangement of such fi rst orientation.

• 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. There shall be fi xing the date and time of the meeting in advance for the whole year, and there

shall be sending of the notice calling for meeting with agenda of the meeting approximately 7 days in advance for the Directors to

be prepared.

In 2008, the Company had 12 times of Board of Directors Meeting and the meeting of Sub-Committee i.e. 9 times of

Executive Directors meeting, 12 times of Audit Committee meeting, and 3 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 12 / 12

2. Mr. Pong Sarasin 10 / 12

3. Mr. Rutt Phanijphand 12 / 12 9 / 9 3 / 3

4. Mr. Joompol Meesook 11 / 12

5. Mr. Apichat Natasilapa 10 / 12 3 / 3

6. Mrs. Suwanna Buddhaprasart 10 / 12

7. Mr. Manit Udomkunnatum 12 / 12 8 / 9

8. Mr. Naporn Soonthornchitcharoen 12 / 12 9 / 9

9. Mr. Khunawut Thumpomkul 12 / 12 9 / 9

10. Mr. Apilas Osatananda 11 / 12 12 / 12

11. Mr. Thaveevat Tatiyamaneekul 12 / 12 12 / 12

12. Mr. Chanin Roonsumran 12 / 12 12 / 12 3 / 3

Name – Surname

Attendance / Number of all meetings (times)

Board of Director Executive Director Audit Committee

Nomination and Remuneration

Committee

45

• Evaluation of the work performance of the Managing Directors

The Company has the Nomination and Remuneration Committee to propose opinion to the Board of Directors of the Com

pany 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.

• 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 already. The plan for

mid-level executive and high-rank executive are in progress, which this will to ensure that the operation of the Company can

be continued.

• Forming 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.

The Company has policy of risk management, group of management shall jointly consider and analyze risk factors both

external and internal the organization, by having meeting every 2 weeks and following up the situation that is a cause of risk closely,

and notifying to the relevant staff for acknowledgement and to comply with the stipulated measurement of risk management .

Moreover, there was a proposal to appoint the auditor to evaluate effi ciency of internal accounting control of the Company

which the resolution of the shareholders in 2008, approved to appoint the auditor from Ernst & Young Co., Ltd., by

Mrs. Nongrak Pumnoi, an auditor License number 4172 as the auditor of the Company and its subsidiaries for the year 2008.

46

On February 5, 2009, the Board of Directors, Audit Committee and management evaluated the Company’s internal control system.

The evaluation was done on the following fi ve criteria:

1. Organization and Environment The Board of Directors opines that the Company has clear organization chart and has specifi ed scope of authority, responsibility of

each department in writing, having specifi ed clear target of business operation which is measurable, which the setting of the target and

work plan the management and each executive of each fi eld 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 the policy, working rules, and Code of Conduct in relation to Ethics, the Company shall occasionally consider to change it to be

appropriate to the changing situation, by considering the laws and regulations and the eff ect that may be occurred to the interest person.

Beside causing the fair result to every part, it is also an obstruction of possibility for the occurrence of fraud.

2. Risk Management The Board of Directors opines that the group of executives has regularly considered and evaluated the risks that may aff ect the result

of operation of the Company, by specifying operation plan of every year and fi xed to have meeting in every 2 weeks in order to follow up

the result of operation, and the risk factors closely for setting management method and for controlling the risk to be at the acceptable level,

and notifi ed relevant staff to be aware of and to comply with the measurement of risk management.

3. Controlling The Board of Directors opines that the Company has specifi ed 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 informa-

tion 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 sup-

plement to records properly. The Company hired Brambles (Thailand) Co., Ltd., a document retaining company, as the document keeper

with the appropriate controlling system.

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.

In case there is an internal audit, the Company has required the internal auditor to report the result directly to the Board of Directors

or the Audit Committee, in order for the auditor to perform its duties independently and propose the auditing report in open manner.

Apart form this, the Company’s auditor, Mrs. Nonglak Pumnoi, the auditor with certifi ed license no. 4172 of Ernst & Young Offi ce Co.,

Ltd, as the auditor of the Company for the year end on December 31, 2008 has given her comment on the assessment of the effi ciency of the

internal control of the Company’s accounting that no signifi cant weak points were found in the internal audit system on the accounting.

I n t e r n a l C o n t r o l

47

D i v i d e n d P o l i c y

Dividend 2005 2006 2007

Baht per share 0.20 0.12 0.18

1. Land and Houses Plc. and subsidiary

• Being a major shareholder of the Sale of goods 10,460 9,293 Such value was the

Company by holding 29.71% of total Account Receivable 2,261 1,708 appropriate selling price as

paid-up capital, as of April 23, 2008. it was the same as the

• With 2 co-directors : market price which the

1. Mr. Anant Asavabhokhin Company sales to the other

2. Mr. Naporn Soonthornchitcharoen manufacturers or sellers.

2. Quality Houses Plc. and subsidiary

• Being a major shareholder of the Sale of goods 871 2,702 Such value was the

Company by holding 20.84% of total Account Receivable 66 336 appropriate selling price as

paid-up capital, as of April 23, 2008. it was the same as the

• With 4 co-directors : market price which the

1. Mr. Rutt Phanijphand Company sales to the other

2. Mr. Anant Asavabhokhin manufacturers or sellers.

3. Mrs. Suwanna Buddhaprasart

4. Mr. Joompol Meesook

R e l a t e d T r a n s a c t i o n s

Remark : 1. The Company increased its registered capital from Baht 977,343,641 to Baht 1,938,146,860, as resolved by an Extraordinary Shareholders

Meeting No. 1/2549 on October 31, 2006.

2. The Company increased its registered capital from Baht 1,938,146,860 to Baht 1,988,546,860 as resolved by 2008 Annual Shareholders Meeting

on April 4, 2008.

Name of Company / Nature of relationship TransactionAmount (Thousand Baht)

31 Dec 08 31 Dec 07

Audit Committee and Management’s opinion

The Company has the policy to pay dividend to shareholders not less than 40% of the net profi t of each year. However, the

consideration for dividend payment will take other factors into account such as result of operation and fi nancial 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 during 2005 – 2007 is as follows:

During the years, the Company and its subsidiary had signifi cant business transactions with related parties, which have been con-

cluded on commercial terms and bases agreed upon in the ordinary course of business between the Company and those companies.

As of December 31, 2008 and 2007, the Company had outstanding balance with the related transaction, which can be summarized

as follows:

48

3. Land and Houses Retail Bank Plc.

• With co-shareholders: Interest income 1,647 270 The Company received the

1. Land and Houses Plc. Deposit with fi nancial institution 435,140 134 interest with the same rate

2. Quality Houses Plc. as other customers of the

• With co-directors: bank, such rate was a

1. Mr. Anant Asavabhokhin normal rate of other banks

2. Mr. Rutt Phanijphand and fi nancial institutions.

3. Mr. Naporn Soonthornchitcharoen

4. Mrs. Suwanna Buddhaprasart

4. Quality Construction Products Plc.

and subsidiary

• Land and Houses Plc. and Purchase of goods 5,329 1,423 Such value was the

Quality House Plc. are the major Other Receivable 6 3 appropriate purchase price

shareholders of Quality Construction Trade Accounts Payable 2,264 20 because it was the same

Products Plc. by holding 31.41% market price which the

and 24.33% respectively, Company could purchase

as of February 20, 2008. from other manufacturers or

• With 4 co-directors: sellers.

1. Mr. Anant Asavabhokhin

2. Mr. Pong Sarasin

3. Mr. Naporn Soonthornchitcharoen

4. Mr. Joompol Meesook

5. Quality Houses Property Fund

• With co-shareholders

1. Quality Houses Plc. Rental and service expenses 18,575 16,747 Such value was generated

2. Land and Houses Plc. Other Payable 1,307 1,661 from the transactions of rent

Rental guarantee deposit 3,000 3,000 and services fee for the

space in the Wave Place

building. The Audit

Committee opined that

such price was calculated

from the appropriate rate.

Necessity and Appropriate Reason of Transaction

The connected transaction made was necessary and reasonable to create the highest benefi t 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.

Name of Company / Nature of relationship TransactionAmount (Thousand Baht)

31 Dec 08 31 Dec 07

Audit Committee and Management’s opinion

49

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 Land and Houses

Property Fund.

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 specifi cation 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 to 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 who may have confl ict of benefi t, or

may have confl ict 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 infor-

mation to supplement 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 fi nancial statement audited by the Auditor of the Company.

50

F i n a n c i a l A n a l y s i s and B u s i n e s s O p e r a t i o n R e s u l t s

Overview of Business Operation Results During the last 3 years, economy of the country has been aff ected by various factors including political uncertainties, problems from

natural disaster, increase in oil price, and decrease of consumer confi dence. These all have eff ects to almost every business sector, including

retail business.

The Company realized the above factors and looked for measures and strategies for appropriate use. This can be seen from the

Company’s operation result which still maintained the growth over previous year.

The forced factors of the Company’s operation results were the increase of branches from 26 branches in 2006 to 30 branches in

2007 and 33 branches in 2008, sales growth increase of the newly opened branches, effi ciency of inventory cost management, revenue from

space rental services business, revenues of HomePro EXPO, etc.

Operating Result Comparing the result of operation for year ended 31st December 2008 to the same period of year 2007.

1. Revenue from Sales

In 2008, the Company and its subsidiary generated the revenue from sales of Baht 18,540.27 million, increased from year

2007 by Baht 2,597.00 million or 16.29%. The increase was mainly driven by the sales of the newly opened branches during 2007 to

2008, and from the sales from HomePro EXPO in the 1st and 4th quarter of the year.

2. Other Revenues

In 2008, the Company and its subsidiary generated other revenues of Baht 1,283.91 million, increased from 2007 by Baht

211.98 million or 19.77%, from the following transactions:

• Revenue from rental and service fee, increased from the previous year by Baht 55.91 million, from space rental revenue of

Rayong branch which has operated in December 2006, from the HomePro EXPO No. 7 and 8, and from rental business of its

subsidiary.

• Other Revenues of Baht 517.72 million, increased from the previous year by Baht 156.07 million, revenue from advertising

fee, support fee of promotional activities from business partners, service fee in relating to sales of goods and other revenues

of its subsidiary.

3. Cost of Sales and Gross Profi t Margin

In 2008, the Company and its subsidiary had the cost of sales of Baht 14,146.73 million, increased from the previous year by

1,864.50 million or 15.18%, which was the result of the increase of sales.

The Company had gross profi t of Baht 4,393.54 million, increased from the previous year of Baht 732.50 million. The gross

profi t margin as percent to sales was 23.70%, moved up from the previous year of 22.96%.

The increase of gross profi t was resulted by the increase in effi ciency of inventory management system as well as increase in

volume discount of order in the large quantity. As a result, the increase rate of cost of good sold is less than the increase rate of gross

margin. The gross margin has also increased by the increase in sales volume of house brand and private brand products.

51

4. Selling and Administrative Expenses

In 2008, the Company and its subsidiary had selling and administrative expenses amounted to Baht 4,191.90 million,

increased from the previous year by Baht 613.27 million or 17.14%. The proportion as percent to sales increased from 22.45% to

22.61%, details of expenses in each group are as follows:

• Selling expenses of Baht 3,382.11 million, being expenses for branches, operation and distribution unit, increased by

Baht 466.70 million from expense on salary and remuneration, space rental and service fee of newly opened branches in

2008, transportation fee, expenses on sales promotion, and depreciation.

• Administrative expenses of Baht 779.48 million, mostly being expenses of Head Offi ce, increased by Baht 171.27 million

from the expenses of salary and remuneration, consultation, tax, and fees.

• Other expenses amounted to Baht 30.31 million, decreased by Baht 24.70 million.

5. Financial Expenses

Financial Expenses of year 2008 were Baht 175.12 million, decreased from the previous year by Baht 40.71 million or 23.25%.

The proportion as percent to sales decreased from 1.10% to 0.72%, which the major factor was driven by the decrease of paid

interest from partial payment of long-term loan and the lower of interest rate.

6. Net Profi t

For the result of operation in 2008, the Company and its subsidiary had net profi t of Baht 959.42 million, increased from the

previous year by Baht 249.04 million or 35.06 %. The increase of net profi t was caused by the increase of sales and other revenues,

together with the decrease of cost of sales and decrease of interest payment. These made the proportion of net profi t to sales to

move up from 4.46% to 5.17%.

7. Return on Equity

As of 31st December 2008 and 31st December 2007, the Company and its subsidiary had return on equity of 20.68% and

17.41% respectively. The increase of return on equity in 2008 was caused by the increase in profi tability in 2008.

Financial Status Comparing fi nancial status as at 31st December 2008 and 31st December 2007.

1. Net Assets

As at 31st December 2008, the Company and its subsidiary had total assets of Baht 13,369.07 million, increased from

31st December 2007 by Baht 1,094.78 million or 8.92%. The growth of asset value was from the change of signifi cant transactions

as follows:

• Cash and cash equivalents increased by Baht 368.71 million which was from the increase in bank deposit received from

issuance of debenture and outstanding cash at branches at the year end date.

• Net inventory increased by Baht 180.51 million, which was a result from inventory for new branches.

• Net Property, plant and equipment, and net leasehold rights and software totaling increased by Baht 497.13 million or

5.54%, which was from the investment in new store expansion in year 2008 and 2009 and net off accumulated

dapreciation.

• Other assets increased by Baht 48.43 million.

52

Not yet Due 127.42 129.11 125.32 122.59

Past Due:

• Up to 6 months 16.66 17.49 14.05 16.96

• 6 – 12 months 0.01 - 0.01 -

• Over12 months 16.52 17.77 16.52 17.77

Total 160.63 164.37 155.91 157.32

Transactions31 Dec 2008 31 Dec 2007 31 Dec 2008 31 Dec 2007

Consolidated Financial Statement Separate Financial Statement

(Unit : Million Baht)

Accounts Receivable

As of December 31, 2008, the Company and its subsidiary had total net accounts receivable of Baht 134.98 million,

decreased by Baht 8.60 million or 5.99% from December 31, 2007. The details on due period of accounts receivable can be

summarized according to the schedule as following:

As of December 31, 2008, the Company and its subsidiary had overdue accounts receivable exceeding 12 months of

Baht 16.52 million, which was partly from the debtors who had diffi culty relating to their operation aff ected by the economic

situation in 1997. However, the Company had already proceeded with lawsuits and set provisions for bad debts. As of

December 31, 2007 and December 31, 2008, the Company set allowance for doubtful bad debts for the said debtors of Baht

20.78 million, and Baht 25.64 million, respectively.

2. Liabilities

As of December 31, 2008, total liabilities of the Company and its subsidiary were Baht 8,412.86 million increased from

2007 by Baht 462.05 million or 5.81%, which was from the change of the following crucial transactions:

• Overdraft funds and short-term loan from fi nancial institution were decreased for Baht 430.18 million.

• Accounts Payable was increased for Baht 490.80 million which was from the increase according to sales.

• Repayment of hire-purchase agreements and repayment of loan at the amount of Baht 408.46 million.

• Debenture - net was increased for Baht 550 million.

• Accrued expenses increased by Baht 141.82 million and deposit received for goods increased by Baht 56.25 million,

which the major factor was from increase in deposit of HomePro EXPO and increase in cost of promotional activities.

• Other debts were increased for Baht 61.82 million.

3. Shareholder Equipment

As of December 31, 2008, the shareholder equity was Baht 4,956.21 million, increased from December 31, 2007 by Baht

632.73 million or 14.63% which the increase was from following transactions:

• Issuance of paid-up ordinary shares at the amount of Baht 8.69 million, increased from the conversion of the warrant

under ESOP scheme No.2, 3 and 4.

• Retained earning was increased by Baht 612.93 million, which increased from the net profi t in year 2008 at the

amount of Baht 959.42 million and payment of dividend in year 2007 at the amount of Baht 346.49 million.

4. Capital Structure

As of December 31, 2008, the Company and its subsidiary had Total Debt to Equity ratio at 1.70 times, decreased from

December 31, 2007 at 1.84 times, as a result of the repayment of short-term loan and long-term loan, repayment of

Debenture, and the increase of retained earnings.

53

Transactions2008 2007 2008 2007

Consolidated Financial Statement Separate Financial Statement

Cash from operating activities 2,263.24 1,652.22 2,243.58 1,650.47

Cash from investing activities (1,279.21) (1,154.88) (1,278.02) (1,150.91)

Cash from fi nancing activities (615.32) (432.23) (605.32) (422.23)

Net increase (decrease) in cash 368.71 65.11 360.24 77.33

(Unit : Million Baht)

Liquidity Summary of cash fl ow statement as of December 31, 2008 compared to the same period of 2007.

As of December 31, 2008, the Company and its subsidiary’s cash and cash equivalents were Baht 603.79 million, net increased from

December 31, 2007 by Baht 368.71 million, which derived from the following activities:

1. Net cash from operating activities of Baht 2,263.24 million which were received from the net profi t of Baht 959.42 million,

depreciation and amortization of Baht 728.27 million, including change of current assets and current liabilities e.g. accounts

payable increased by Baht 490.78 million, deposit received for goods increased by Baht 56.25 million, accrued expenses

increased by Baht 136.93 million, other transactions increased by Baht 192.56 million, net cash paid for inventory, increased by

Baht 239.88 million, and other receivables increased by Baht 61.09 million.

2. Net cash paid for investing activities of Baht 1,279.21 million which was paid for investment in fi xed asset for new store expansion

in 2008 for the amount of Baht 1,012.40 million, computer software for Baht 31.15 million, and investment in the leasehold rights

for new branch opening in year 2008 and 2009 for Baht 236.53 million.

3. Net cash used in fi nancing activities of Baht 615.32 million received from the issuance of debenture of Baht 1,130 million,

including the increase of ordinary shares from the conversion of warrant of employee (ESOP – W2, W3 and W4) amounted to

Baht 19.80 million, the repayment of short-term loan and long-term loan of Baht 430.18 million and Baht 400 million respectively,

the repayment for debenture of Baht 580 million, and payment of dividend from the profi t in the year 2007 for Baht 346.49 million.

Liquidity Ratio

As of 31st December 2008, the liquidity ratio of the Company and its subsidiary was at 0.62 times, increased from 31st

December 2007 at 0.56 times due to the increase of current assets which was higher than the current liabilities.

• Total current asset increased by Baht 582.62 million, major cause was the allowance for stock obsolescence increased by

Baht 180.51 million and the cash and cash equivalents increased by Baht 368.71 million.

• Total current liabilities increased by Baht 395.86 million, the major cause of the increase was from the increase of

accounts payable of Baht 490.80 million, debenture which to be matured within 1 year at the amount of Baht 160 million

and the increase of accrued expenses of Baht 141.82 million.

Auditing Fee According to the minutes of the annual general shareholders meeting in 2008, which resolved to appoint the Auditors of Ernst &

Young Offi ce Co., Ltd as the Company’s auditor of year 2008, with the fee of Baht 2,400,000.

The actual audit fee of year 2008 includes auditing fee for the Company and its subsidiary at the amount of Baht 2,250,000 and other

services fee at the amount of Baht 100,000, totaling Baht 2,350,000.

54

R e p o r t o f B o a r d o f D i r e c t o r s ’ R e s p o n s i b i l i t i e s i n t h e F i n a n c i a l S t a t e m e n t s

Dear Shareholders

The accompanying consolidated fi nancial statements of Home Product Center Public Company Limited and subsidiaries 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, suffi cient to

maintain the assets and to protect from fraud, and is responsible for the fi nancial report of the Company and its subsidiary in order to ensure

that it shows the actual result of operation, fi nancial status, and cash fl ows. There have been proper recording of accurate and complete

accounting information. Preparing of the fi nancial 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 suffi cient signifi cant information in the

supplementary to the fi nancial statements

(Mr. Anant Asavabhokhin)

Chairman

(Mr. Khunawut Thumpomkul)

Managing Director

55

A u d i t C o m m i t t e e’ s R e p o r t

Dear Shareholders

The Audit Committee consists of 3 independent directors being Mr. Apilas Osatanon, as Chairman, Mr. Thaveevat Tatiyamaneekul and

Mr. Chanin Roonsumran, as directors, having the duty to examine the reliability of fi nancial statement.

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 suffi cient fi nancial report, have effi cient corporate governance and internal control system, have the com-

pliance with relevant laws and regulations, have monitored the transaction which may have confl ict of interest in order to be in compliance

with the relevant rules and regulations and to earn the utmost benefi ts to the company, as well as the selection and proposing the opinion

for appointment of the external auditor.

For the year 2008, 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 12 meetings which at each

meeting all the directors attended, and the auditor was invited to attend for the agenda which was relevant. The essence of the work having

been performed can be summarized as follows:

Essence of the Work Performed in year 2008

1. Having considered the review, improvement and amendment to the charter of the Audit Committee to be consistent with the

Announcement of the Stock Exchange of Thailand regarding the Qualifi cation and Scope of the Proceeding of the Audit Committee

of year 2008.

2. Having considered and review the quarterly fi nancial report of the company and the annual fi nancial statements before such were

disclosed to the Stock Exchange of Thailand and the Offi ce of the Securities and Stock Exchange Commission, which such was made

in the agenda of the review of the fi nancial report of the company.

3. Having considered the selection and nomination of company’s external auditor and determination of the remuneration to propose

to the Company’s Board of Directors for the request for approval from the meeting of shareholders.

4. Having convened with the external auditor for 4 times for considering the guidelines for the performance and scope for the

proceeding to examine the accounting, for the review of the audit plan, for the result of the audit and recommendation in order to

ensure that the audit of the fi nancial 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.

5. Having had the meeting with the Offi ce of Internal Audit for the operation and scope of proceeding, the review of examination 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 2008, the audits were made to evaluate the suffi ciency and effi ciency 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 cause more eff ectiveness and effi ciency to the

internal control system.

6. 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.

7. Having considered the disclosure of information, inter and related transactions and the transaction which may have confl icts of

interest.

8. Having made the evaluation of the suffi ciency 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.

56

A u d i t C o m m i t t e e’ s R e p o r t ( c o n t i n u e d )

The Audit Committee has the following opinion;

1. The fi nancial report of the Company is reliable, accurate and complete according to the generally accepted accounting principle

and has suffi ciently and timely disclosed material information.

2. The company has suffi cient and effi cient internal control system, risks management system, system of operational control of the

management, 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 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 fi nancial statements are independent, have no relation or

transaction which may cause confl icts of interest with the Company. This can be ensured that the accounting audits were made

completely and appropriately according to the accounting standard and were effi cient and transparent.

5. The entering into the transaction with related business or the entering into the transaction which may have confl icts of interest have

been made in accordance with the law, the rules of the Stock Exchange of Thailand, with appropriate reason for the utmost benefi ts

for the Company, and have no indication or other observations to imply any abnormal circumstance.

6. The Audit Committee has performed the duty completely, correctly and independently, according to the Charter that the Audit

Committee has prescribed with good cooperation from every party.

(Mr. Apilas Osatananda)

Chairman of the Audit Committee

57

I n d e p e n d e n t A u d i t o r ‘ s R e p o r t

To the Shareholders of Home Product Center Public Company Limited

I have audited the accompanying consolidated balance sheets of Home Product Center Public Company Limited and its subsidiary

as at 31 December 2008 and 2007, the related consolidated statements of income, changes in shareholders’ equity and cash fl ows for

the years then ended, and the separate fi nancial statements of Home Product Center Public Company Limited for the same years. These

fi nancial statements are the responsibility of the Company’s management as to their correctness and the completeness of the presentation.

My responsibility is to express an opinion on these fi nancial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform

the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes

assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement

presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the fi nancial statements referred to above present fairly, in all material respects, the fi nancial position of Home Product

Center Public Company Limited and its subsidiary and of Home Product Center Public Company Limited as at 31 December 2008 and 2007,

and the results of their operations and cash fl ows for the years then ended, in accordance with generally accepted accounting principles.

Nonglak Pumnoi

Certifi ed Public Accountant (Thailand) No. 4172

58

Assets

Current assets

Cash and cash equivalents 9 603,788,150 235,075,012 579,894,685 219,650,478

Trade accounts receivable - net 6, 9 134,983,014 143,581,753 130,267,530 136,533,570

Inventories - net 7 2,728,078,526 2,547,568,876 2,728,078,526 2,547,568,876

Value added tax receivable 11,263,216 43,003,697 11,263,216 43,003,697

Other receivables 9 297,520,307 236,434,479 304,448,556 237,221,877

Other current assets 70,844,841 58,191,986 58,369,602 40,119,196

Total current assets 3,846,478,054 3,263,855,803 3,812,322,115 3,224,097,694

Non-current assets

Investment in subsidiary 8 - - 4,999,300 4,999,300

Property, plant and equipments - net 10 8,613,170,787 8,339,581,890 8,602,413,768 8,326,000,801

Computer software - net 11 130,162,250 116,144,593 130,155,574 116,136,972

Leasehold rights - net 12 722,963,659 513,439,644 722,963,659 513,439,644

Property foreclosed 4,174,122 4,174,122 4,174,122 4,174,122

Rental guarantee deposits 9 38,390,882 34,618,986 38,390,882 34,618,986

Other non-current assets 13,731,996 2,469,082 2,964,574 2,469,082

Total non-current assets 9,522,593,696 9,010,428,317 9,506,061,879 9,001,838,907

Total assets 13,369,071,750 12,274,284,120 13,318,383,994 12,225,936,601

The accompanying notes are an integral part of the fi nancial statements.

B a l a n c e s h e e t sAs at 31 December 2008 and 2007

Note2008 2007 2008 2007

Consolidated fi nancial statements Separate fi nancial statements

(Unit : Baht)

59

The accompanying notes are an integral part of the fi nancial statements.

B a l a n c e s h e e t s ( c o n t i n u e d )As at 31 December 2008 and 2007

Liabilities and shareholders’ equity

Current liabilities

Bank overdrafts and short-term loans

from fi nancial institutions 13 124,823,805 555,000,000 124,823,805 555,000,000

Trade accounts payable 9 3,697,157,646 3,206,355,160 3,692,452,199 3,202,571,172

Current portion of liabilities under

fi nancial lease agreements 14 9,295,721 12,935,623 9,295,721 12,935,623

Short-term loans from related party 9 - - 60,000,000 50,000,000

Current portion of debentures 15 660,000,000 500,000,000 660,000,000 500,000,000

Current portion of long-term loans 16 300,000,000 400,000,000 300,000,000 400,000,000

Payables from purchases of assets 113,838,115 142,470,097 113,838,115 142,470,097

Accrued expenses 380,940,852 239,122,621 365,069,614 218,636,515

Corporate income tax payable 166,962,762 136,842,786 166,962,762 136,842,786

Advances received from customers 443,928,321 387,675,054 443,928,321 387,675,054

Other payables 9 1 98,309,742 153,505,090 187,111,688 147,232,610

Other current liabilities 108,293,461 73,788,395 106,646,011 72,058,688

Total current liabilities 6,203,550,425 5,807,694,826 6,230,128,236 5,825,422,545

Non-current liabilities

Liabilities under fi nancial lease

agreements - net of current portion 14 5,470,378 10,289,163 5,470,378 10,289,163

Debentures - net of current portion 15 890,000,000 500,000,000 890,000,000 500,000,000

Long-term loans - net of current portion 16 675,000,000 975,000,000 675,000,000 975,000,000

Rental received in advance 26.2 542,793,413 564,403,473 542,793,413 564,403,473

Other non-current liabilities 96,046,295 93,418,356 30,228,946 33,317,801

Total non-current liabilities 2,209,310,086 2,143,110,992 2,143,492,737 2,083,010,437

Total liabilities 8,412,860,511 7,950,805,818 8,373,620,973 7,908,432,982

Note2008 2007 2008 2007

Consolidated fi nancial statements Separate fi nancial statements

(Unit : Baht)

60

Shareholders’ equity

Share capital 17, 18

Registered share capital

1,986,468,146 ordinary shares

of Baht 1 each

(2007: 1,988,546,860 ordinary shares

of Baht 1 each) 1,986,468,146 1,988,546,860 1,986,468,146 1,988,546,860

Issued and paid-up share capital

1,933,610,600 ordinary shares

of Baht 1 each

(2007: 1,924,920,422 ordinary shares

of Baht 1 each) 1,933,610,600 1,924,920,422 1,933,610,600 1,924,920,422

Share premium 566,804,398 555,694,063 566,804,398 555,694,063

Retained earnings

Appropriated - statutory reserve 19 178,400,000 130,700,000 178,400,000 130,700,000

Unappropriated 2,277,393,938 1,712,162,281 2,265,948,023 1,706,189,134

Equity attributable to the

Company’s shareholders 4,956,208,936 4,323,476,766 4,944,763,021 4,317,503,619

Minority interest - equity attributable to

minority shareholders of subsidiary 2,303 1,536 - -

Total shareholders’ equity 4,956,211,239 4,323,478,302 4,944,763,021 4,317,503,619

Total liabilities and shareholders’ equity 13,369,071,750 12,274,284,120 13,318,383,994 12,225,936,601

B a l a n c e s h e e t s ( c o n t i n u e d )As at 31 December 2008 and 2007

Note2008 2007 2008 2007

Consolidated fi nancial statements Separate fi nancial statements

(Unit : Baht)

The accompanying notes are an integral part of the fi nancial statements.

61

I n c o m e s t a t e m e n t sFor the years ended 31 December 2008 and 2007

Note2008 2007 20072008

Consolidated fi nancial statements Separate fi nancial statements

(Unit : Baht)

The accompanying notes are an integral part of the fi nancial statements.

Revenues

Sales income 9 18,540,272,456 15,943,275,956 18,541,729,829 15,943,895,012

Rental and service income 9 610,121,551 554,214,345 506,108,373 455,765,862

Other income 9 673,791,205 517,723,315 696,128,323 534,636,075

Total revenues 19,824,185,212 17,015,213,616 19,743,966,525 16,934,296,949

Expenses

Cost of sales 9 14,146,727,776 12,282,229,303 14,146,727,776 12,282,229,303

Selling expenses 9 3,382,111,383 2,915,410,490 3,313,373,594 2,845,773,538

Administrative expenses 9 779,478,902 608,212,551 773,920,598 602,363,491

Other expenses 30,307,413 55,003,706 30,211,710 55,000,282

Total expenses 18,338,625,474 15,860,856,050 18,264,233,678 15,785,366,614

Income before fi nancial cost and

corporate income tax 1,485,559,738 1,154,357,566 1,479,732,847 1,148,930,335

Financial cost 9 (134,409,118) (175,117,118) (136,022,575) (177,349,787)

Income before corporate income tax 1,351,150,620 979,240,448 1,343,710,272 971,580,548

Corporate income tax (391,730,900) (268,864,300) (389,764,087) (266,804,807)

Net income for the year 959,419,720 710,376,148 953,946,185 704,775,741

Net income attributable to:

Equity holders of the parent 959,418,953 710,375,364 953,946,185 704,775,741

Minority interests of the subsidiary 767 784

959,419,720 710,376,148

Earnings per share 21

Basic earnings per share

Net income attributable to equity

holders of the parent 0.50 0.37 0.49 0.37

Diluted earnings per share

Net income attributable to equity

holders of the parent 0.49 0.37 0.49 0.36

62

Cash fl ows from operating activities

Net income before tax 1,351,150,620 979,240,448 1,343,710,272 971,580,548

Adjustments to reconcile net income before tax to

net cash provided by (paid for) operating activities:

Depreciation and amortisation 728,267,920 657,085,722 724,353,707 653,931,534

Allowance (reversal) for doubtful accounts 4,857,895 (4,455,502) 4,857,895 (4,455,502)

Allowance for stock obsolescence 59,375,259 41,041,011 59,375,259 41,041,011

Loss from sales of assets 4,635,329 12,003,705 4,539,626 12,000,281

Allowance for impairment of assets 20,540,000 43,000,000 20,540,000 43,000,000

Unrealised exchange losses - net 24,532 215,390 24,532 215,390

Interest expenses 124,228,618 169,082,407 125,960,878 171,383,736

Income from operating activities before changes in

operating assets and liabilities 2,293,080,173 1,897,213,181 2,283,362,169 1,888,696,998

Decrease (increase) in operating assets

Trade accounts receivable 3,740,844 (2,279,166) 1,408,145 (628,468)

Inventories (239,884,909) (92,931,781) (239,884,909) (92,931,781)

Value added tax receivable 31,740,481 36,926,450 31,740,481 36,926,450

Rental guarantee deposit (3,771,896) (7,410,833) (3,771,896) (7,410,833)

Other receivables (61,085,828) (20,808,713) (67,226,679) (16,358,013)

Other current assets (8,911,590) 18,937,136 (18,250,406) 19,744,137

Other non-current assets (11,262,914) (688,435) (495,492) (688,435)

Increase (decrease) in operating liabilities

Trade accounts payable 490,777,954 128,751,886 489,856,495 127,943,828

Other payables 44,804,652 (749,768) 39,879,078 (946,697)

Advances received from customers 56,253,267 96,105,971 56,253,267 96,105,971

Accrued expenses 136,930,241 20,163,668 141,545,107 17,260,163

Other current liabilities 34,505,066 14,497,200 34,587,323 14,622,984

Rental received in advance (21,610,060) (22,670,843) (21,610,060) (22,670,843)

Other non-current liabilities 2,627,939 (23,818,857) (3,088,855) (22,762,696)

Cash from operating activities 2,747,933,420 2,041,237,096 2,724,303,768 2,036,902,765

Cash paid for interest expenses (119,402,301) (169,202,046) (121,134,561) (171,503,374)

Cash paid for corporate income tax (365,290,516) (219,813,535) (359,582,436) (214,931,754)

Net cash fl ows from operating activities 2,263,240,603 1,652,221,515 2,243,586,771 1,650,467,637

S t a t e m e n t s o f c a s h f l o w sFor the years ended 31 December 2008 and 2007

2008 2007 2008 2007

Consolidated fi nancial statements Separate fi nancial statements

(Unit : Baht)

The accompanying notes are an integral part of the fi nancial statements.

63

Cash fl ows from investing activities

Decrease in current investment - 525,000,000 - 525,000,000

Acquisition of software (31,147,714) (27,269,454) (31,147,714) (27,269,454)

Acquisition of leasehold rights (236,526,147) (2,506,000) (236,526,147) (2,506,000)

Proceeds from sales of assets 871,793 7,031,140 868,411 7,030,061

Acquisition of assets (1,012,403,732) (1,657,141,623) (1,011,215,449) (1,653,167,416)

Net cash used in investing activities (1,279,205,800) (1,154,885,937) (1,278,020,899) (1,150,912,809)

Cash fl ows from fi nancing activities

Increase (decrease) in bank overdrafts

and short-term loans from fi nancial institutions (430,176,195) 555,000,000 (430,176,195) 555,000,000

Increase in short-term loans from related party - - 120,000,000 10,000,000

Repayment of short-term loans from related party - - (110,000,000) -

Increase in long-term loans - 100,000,000 - 100,000,000

Decrease in liabilities under fi nancial

lease agreements (8,458,687) (10,891,985) (8,458,687) (10,891,985)

Increase in debentures 1,130,000,000 - 1,130,000,000 -

Repayment of debentures (580,000,000) - (580,000,000) -

Repayment of long-term loans (400,000,000) (851,000,000) (400,000,000) (851,000,000)

Converted warrants to share capital 19,800,513 5,102,018 19,800,513 5,102,018

Dividend paid (346,487,296) (230,438,927) (346,487,296) (230,438,927)

Net cash used in fi nancing activities (615,321,665) (432,228,894) (605,321,665) (422,228,894)

Net increase in cash and cash equivalents 368,713,138 65,106,684 360,244,207 77,325,934

Cash and cash equivalents at beginning of year 235,075,012 169,968,328 219,650,478 142,324,544

Cash and cash equivalents at end of year 603,788,150 235,075,012 579,894,685 219,650,478

Supplemental cash fl ows information: -

Non-cash items consist of

Decrease in payables from purchases of assets 28,631,982 82,005,015 28,631,982 82,005,015

S t a t e m e n t s o f c a s h f l o w s ( c o n t i n u e d )For the years ended 31 December 2008 and 2007

2008 2007 20072008

Consolidated fi nancial statements Separate fi nancial statements

(Unit : Baht)

The accompanying notes are an integral part of the fi nancial statements.

64

Balance as

at 31 December 2006 1,919,818,404 555,694,063 95,400,000 1,267,525,844 3,838,438,311 752 3,838,439,063

Net income for the year - - - 710,375,364 710,375,364 784 710,376,148

Dividend paid (Note 24) - - - (230,438,927) (230,438,927) - (230,438,927)

Unappropriated retained

earnings transferred to

statutory reserve - - 35,300,000 (35,300,000) - - -

Converted warrants to

share capital 5,102,018 - - - 5,102,018 - 5,102,018

Balance as

at 31 December 2007 1,924,920,422 555,694,063 130,700,000 1,712,162,281 4,323,476,766 1,536 4,323,478,302

Balance as

at 31 December 2007 1,924,920,422 555,694,063 130,700,000 1,712,162,281 4,323,476,766 1,536 4,323,478,302

Net income for the year - - - 959,418,953 959,418,953 767 959,419,720

Dividend paid (Note 24) - - - (346,487,296) (346,487,296) - (346,487,296)

Unappropriated retained

earnings transferred to

statutory reserve - - 47,700,000 (47,700,000) - - -

Converted warrants to

share capital 8,690,178 11,110,335 - - 19,800,513 - 19,800,513

Balance as

at 31 December 2008 1,933,610,600 566,804,398 178,400,000 2,277,393,938 4,956,208,936 2,303 4,956,211,239

Appropriated- statutory

reserve

Total equityattributable to

the parent’s shareholders

Share premium

S t a t e m e n t s o f c h a n g e s i n s h a r e h o l d e r s ’ e q u i t yFor the years ended 31 December 2008 and 2007

Issued andpaid-up

share capital TotalUnappropriated

Retained earnings

Equity attributable to the parent’s shareholders

Consolidated fi nancial statements

(Unit : Baht)

Minority interest - equity

attributableto minority of shareholders

subsidiary

The accompanying notes are an integral part of the fi nancial statements.

65

Appropriated- statutory

reserve

Sharepremium

Balance as at 31 December 2006 1,919,818,404 555,694,063 95,400,000 1,267,152,320 3,838,064,787

Net income for the year - - - 704,775,741 704,775,741

Dividend paid (Note 24) - - - (230,438,927) (230,438,927)

Unappropriated retained earnings

transferred to statutory reserve - - 35,300,000 (35,300,000) -

Converted warrants to share capital 5,102,018 - - - 5,102,018

Balance as at 31 December 2007 1,924,920,422 555,694,063 130,700,000 1,706,189,134 4,317,503,619

Balance as at 31 December 2007 1,924,920,422 555,694,063 130,700,000 1,706,189,134 4,317,503,619

Net income for the year - - - 953,946,185 953,946,185

Dividend paid (Note 24) - - - (346,487,296) (346,487,296)

Unappropriated retained earnings

transferred to statutory reserve - - 47,700,000 (47,700,000) -

Converted warrants to share capital 8,690,178 11,110,335 - - 19,800,513

Balance as at 31 December 2008 1,933,610,600 566,804,398 178,400,000 2,265,948,023 4,944,763,021

S t a t e m e n t s o f c h a n g e s i n s h a r e h o l d e r s ’ e q u i t yFor the years ended 31 December 2008 and 2007

Issued andpaid-up

share capitalTotal

Unappropriated

Retained earnings

Separate fi nancial statements

(Unit : Baht)

The accompanying notes are an integral part of the fi nancial statements.

66

2007

Percent

2007

Percent

2007

Percent

2008

Percent

2008

Percent

2008

Percent

Market Village company Limited 99.99 99.99 Thailand 0.47 0.44 1.16 1.26

Space

Rental

1. Corporate 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 Plc. and Quality Houses Plc., which were incorporated in Thailand. The Company is principally engaged in

the trading of a complete range of materials for construction, repair and maintenance of buildings and residences, and provision for related

services, together with space rental. Its registered address is 96/27 Moo 9, Tambol Bangkhen, Amphur Muang, Nonthaburi. As at 31 Decem-

ber 2008, the Company has a total of 33 branches (2007: 30 branches) located in Bangkok and other provinces.

2. Basis of preparation 2.1 The fi nancial statements have been prepared in accordance with accounting standards enunciated under the Accounting

Profession Act B.E. 2547 and their presentation has been made in compliance with the stipulations of the Notifi cation of the

Department of Business Development dated 14 September 2001, issued under the Accounting Act B.E. 2543.

The fi nancial statements in Thai language are the offi cial statutory fi nancial statements of the Company. The fi nancial statements in

English language have been translated from such fi nancial statements in Thai language.

The fi nancial 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 fi nancial statements include the fi nancial statements of the Company (“the Company”) and the following

subsidiary (“the subsidiary”):

N o t e s t o c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t sFor the years ended 31 December 2008 and 2007

Company’s name Nature ofbusiness

Percentage ofshareholding

Country ofincorporation

Assets as apercentage

to the consolidatedtotal assets as at

31 December

Revenues as a percentage

to the consolidated total revenues for the

years ended31 December

b) Subsidiary is 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 fi nancial statements of the subsidiary are prepared for the same reporting period as the parent company, using

consistentsignifi cant accounting policies.

d) Material balances and transactions between the Company and its subsidiary have been eliminated from the consolidated

fi nancial statements.

e) Investment in the subsidiary as recorded in the Company’s books of account is eliminated against the equity of the subsidiary.

f ) Minority interest represents the portion of net income or loss and net assets of the subsidiary that is not held by the Company

and is presented separately in the consolidated income statement and within equity in the consolidated balance sheet.

2.3 The separate fi nancial statements, which present investment in subsidiary presented under the cost method, have been prepared

solely for the benefi t of the public.

67

3. Adoption of new accounting standards 3.1 Accounting standards which are eff ective for the current year

The Federation of Accounting Professions has issued Notifi cation No. 9/2550, 38/2550 and 62/2550 mandating the use of new

accounting standards as follows.

TAS 25 (revised 2007) Cash Flow Statements

TAS 29 (revised 2007) Leases

TAS 31 (revised 2007) Inventories

TAS 33 (revised 2007) Borrowing Costs

TAS 35 (revised 2007) Presentation of Financial Statements

TAS 39 (revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors

TAS 41 (revised 2007) Interim Financial Reporting

TAS 43 (revised 2007) Business Combinations

TAS 49 (revised 2007) Construction Contracts

TAS 51 Intangible Assets

These accounting standards become eff ective for the fi nancial statements for fi scal years beginning on or after 1 January 2008.

The management has assessed the eff ect of these standards and believes that TAS 43 and TAS 49 are not relevant to the business of the

Company, while TAS 25, TAS 29, TAS 31, TAS 33, TAS 35, TAS 39, TAS 41 and TAS 51 do not have any signifi cant impact on the fi nancial

statements for the current year.

3.2 Accounting standards which are not eff ective for the current year

The Federation of Accounting Professions has also issued Notifi cation No. 86/2551 mandating the use of the following new

accounting standards.

TAS 36 (revised 2007) Impairment of Assets

TAS 54 (revised 2007) Non-current Assets Held for Sale and Discontinued Operations

These accounting standards will become eff ective for the fi nancial statements for fi scal years beginning on or after 1 January

2009. The management has assessed the eff ect of these accounting standards and believes that they will not have any signifi cant impact on

the fi nancial statements for the year in which they are initially applied.

4. Signifi cant accounting policies 4.1 Revenue recognition

Sales of goods Sales of goods are recognized when the signifi cant 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.

Rendering of services Service revenue is recognized when services have been rendered taking into account the stage of completion.

Rental income Rental income under operating leases is recognized over the lease period.

Interest income Interest income is recognized on an accrual basis based on the eff ective interest rate.

68

4.2 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, cash at bank, and all highly liquid investments with an original maturity

of three months or less and not subject to withdrawal restrictions.

4.3 Trade accounts receivable

Trade accounts receivable are stated at the net realizable 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.

4.4 Inventories

Inventories are valued at the lower of cost (moving average cost method) and net realizable value.

Volume incentives received from the supplier are accounted for as a reduction of inventory purchases and recognized in

income statements when the related inventory is sold.

4.5 Investment

Investment in subsidiary is accounted for in the separated fi nancial statements using the cost method.

4.6 Property, plant and equipment/Depreciation

Land is stated at cost. Buildings and equipment are stated at cost amount less accumulated depreciation and allowance for l

osson impairment of assets (if any).

Depreciation of plant and equipment is calculated by reference to their costs, on the straight-line basis over the following

estimated useful lives:

Buildings - 20 years

Buildings on lease land and building improvement - lease periods but not over useful lives

Computer equipment - 3 - 10 years

Furniture, fi xtures and offi ce equipment - 5 - 10 years

Motor vehicles - 5 years

Depreciation is included in determining income.

No depreciation is provided on land and land improvement, and assets under installation and under construction.

4.7 Intangible assets

Intangible assets are measured at cost. Following initial recognition, intangible assets are carried at cost less any

accumulated amortization and any accumulated impairment losses (if any).

Intangible assets with fi nite lives are amortized on a systematic basis over the economic useful life (10 years) and tested

for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the

amortization method of such intangible assets are reviewed at least at each fi nancial year end. The amortization expense

is charged to the income statement.

4.8 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 individuals which directly or indirectly own a voting interest in the Company that gives them signifi cant

infl uence over the Company, key management personnel, directors and offi cers with authority in the planning and direction of

the Company’s operations.

69

4.9 Long-term leases

Leases of equipment and motor vehicles which transfer substantially all the risks and rewards of ownership are classifi ed as

fi nance leases. Finance leases are capitalized 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 fi nance charges, are included in other long-term payables,

while the interest element is charged to the income statements over the lease period. The equipment and motor vehicles

acquired under fi nance leases is depreciated over the useful life of the asset.

4.10 Foreign currencies

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

balance sheet date.

Gains and losses on exchange are included in determining income.

4.11 Impairment of assets

At each reporting date, the Company performs impairment reviews in respect of the properly, plant and equipment and

other intangible assets whenever events or changes in circumstances indicate that an asset may be impaired. An impairment

loss is recognized 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 fl ows are discounted to their

present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks

specifi c 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, refl ects the amount that the Company 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 recognized in the income statement.

4.12 Employee benefi ts

Salaries, wages, bonuses and contributions to the social security fund and provident fund are recognized as expenses when

incurred.

4.13 Provisions

Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that an

outfl ow of resources embodying economic benefi ts will be required to settle the obligation, and a reliable estimate can be made

of the amount of the obligation.

4.14 Income tax

Income tax is provided in the accounts based on taxable profi ts determined in accordance with tax legislation.

70

5. Signifi cant accounting judgments and estimates The preparation of fi nancial statements in conformity with generally accepted accounting principles at times requires

management to make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates

aff ect reported amounts and disclosures and actual results could diff er. Signifi cant judgments and estimates are as follows:

Leases

In determining whether a lease is to be classifi ed as an operating lease or fi nance lease, the management is required to use

judgment regarding whether signifi cant risk and rewards of ownership of the leased asset has been transferred, taking into

consideration terms and conditions of the arrangement.

Allowance for doubtful accounts

In determining an allowance for doubtful accounts, the management needs to make judgment and estimates based upon,

among other things, past collection history, aging profi le of outstanding debts and the prevailing economic condition.

Fair value of fi nancial instruments

In determining the fair value of fi nancial instruments that are not actively traded and for which quoted market prices are not

readily available, the management exercise judgment, 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 longer-term volatility of fi nancial instruments.

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’s 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

judgments regarding forecast of future revenues and expenses relating to the assets subject to the review.

Marketing promotion expenses

Marketing promotion expenses arise in respect of advertising and promotional activities, including various sales promotion

activities that are undertaken when the Company has already sold merchandise but still has obligations to customers to make payment

related to such sales promotion in the future. Certain transactions are estimates based on experience and comparison with various

information available in the related market. However, the use of diff erent estimates and assumptions could aff ect the amounts of

marketing promotion expenses and adjustments to this expense may therefore be required in the future.

71

The outstanding balances of trade accounts receivable as at 31 December 2008 and 2007 are aged as follows:

Age of receivables

Not yet due 127,421,935 129,111,298 125,318,455 122,589,168

Past due:

Up to 6 months 16,664,851 17,488,329 14,052,847 16,962,275

6 - 12 months 14,724 - 14,724 -

Over 12 months 16,524,910 17,767,637 16,524,910 17,767,638

Total 160,626,420 164,367,264 155,910,936 157,319,081

Less: Allowance for doubtful accounts (25,643,406) (20,785,511) (25,643,406) (20,785,511)

Trade accounts receivable - net 134,983,014 143,581,753 130,267,530 136,533,570

Inventories 3,342,685,675 3,049,137,812

Less: Allowance for stock obsolescence (82,484,623) (61,590,238)

Net 3,260,201,052 2,987,547,574

Less: Inventories - repaid its cost when sold (437,617,125) (354,273,297)

Purchase discount (94,505,401) (85,705,401)

Inventories - net 2,728,078,526 2,547,568,876

7. Inventories

6. Trade accounts receivable

Trade accounts receivable 110,092,951 98,643,757 105,430,492 91,595,574

Check returned receivable 16,474,985 17,593,572 16,474,985 17,593,572

Credit card and coupon receivable 34,058,484 48,129,935 34,005,459 48,129,935

Total 160,626,420 164,367,264 155,910,936 157,319,081

Less: Allowance for doubtful accounts (25,643,406) (20,785,511) (25,643,406) (20,785,511)

Trade accounts receivable - net 134,983,014 143,581,753 130,267,530 136,533,570

2008

2008

2008

2007

2007

2007

2008

2008

2007

2007

Consolidated fi nancial statement

Consolidated fi nancial statement

Consolidated and separate fi nancial statements

Separate fi nancial statement

Separate fi nancial statement

(Unit : Baht)

(Unit : Baht)

(Unit : Baht)

72

8. Investment in subsidiary

Subsidiary

Market Village Company Limited 5,000,000 5,000,000 99.99 99.99 4,999,300 4,999,300 - -

Transactions with subsidiary company

(eliminated from consolidated

fi nancial statements)

Sale of goods - - 1,457,373 619,057 Market price

Rental and service income - - 118,957,492 106,898,021 Baht 9.5 - 11.0 million per month

for 2008 and Baht 6.5 - 9.4 million

per month for 2007

Other income - - 22,742,904 21,573,366 Percentage of core revenue

Service income - - 6,872,228 4,062,079 Actual cost

Interest expenses - - 1,732,260 2,301,329 3.40 - 4.25 percent per annum

(2007: 3.40 - 5.15 percent per annum)

Transactions with related companies

Sale of goods 11,331,640 11,994,808 11,331,640 11,994,808 Market price

Interest income 1,647,215 269,551 1,647,215 269,551 0.75 - 3.00 percent per annum

(2007: 0.50 percent per annum)

Purchase of goods 5,328,940 1,422,527 5,328,940 1,422,527 Market price

Rental and service expenses 18,575,202 16,747,295 18,575,202 16,747,295 Percentage of sales

2008 2008 20082007 2007 20072008(Percent)

2007(Percent)

Separate fi nancial statement

Paid-up capital Shareholding percentage Cost Dividend receivedduring the year

(Unit : Baht)

(Unit : Baht)

9. Related party transactions During the years, the Company and its subsidiary had signifi cant business transactions with related parties. Such transactions, which are

summarized below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the

Company and those related parties.

2008 2007 2008 2007

Consolidatedfi nancial statement

Separatefi nancial statement Pricing policy

73

Consolidatedfi nancial statement

Separatefi nancial statement

Bill of exchanges and deposits with fi nancial institution

Land and Houses Retail Bank Plc.(1) 435,139,799 133,705 435,139,799 113,705

Trade accounts receivable

Land and Houses Plc. and subsidiaries(2) 2,261,237 1,708,202 2,261,237 1,708,202

Quality Houses Plc. and subsidiaries(2) 66,457 335,594 66,457 335,594

Market Village Co., Ltd. (eliminated from consolidated fi nancial statements) - - 177,860 131,821

Total 2,327,694 2,043,796 2,505,554 2,175,617

Other receivables

Quality Construction Products Plc. and subsidiaries(1) 6,420 3,210 6,420 3,210

Market Village Co., Ltd. (eliminated from consolidated fi nancial statements) - - 6,928,250 6,025,498

Total 6,420 3,210 6,934,670 6,028,708

Rental guarantee deposits

Quality Houses Property and Loans Funds(1) 3,000,000 3,000,000 3,000,000 3,000,000

Trade accounts payable

Quality Construction Products Plc. and subsidiaries(1) 2,263,542 20,801 2,263,542 20,801

Short-term loans from related party

Market Village Co., Ltd. (eliminated from consolidated fi nancial statements) - - 60,000,000 50,000,000

Other payables

Quality Houses Property and Loans Funds(1) 1,307,185 1,660,870 1,307,185 1,660,870

As at 31 December 2008 and 2007, the Company had the following outstanding balances with related parties: -

Relationship with the related companies

(1) has common shareholders

(2) the major shareholders

During the year 2008, movement in the balances of short-term loans from related party were as follows:

Subsidiary

Market Village Company Limited 50,000,000 120,000,000 (110,000,000) 60,000,000

(Unit : Baht)

(Unit : Baht)

20082008 20072007

As at1 January 2007

As at31 December 2008

During the year

Increase Decrease

74

Short-term loans from related party

The Company has received unsecured loans of Baht 60 million (2007: Baht 50 million) from subsidiary, on which interest is payable

on a monthly basis at a rate of 3.40 - 4.25 percent per annum. The loans are repayable at call.

Directors and management’s remuneration

During the year 2008, the Company and its subsidiary paid salaries, bonus, meeting allowance and gratuities to their directors and

management totaling Baht 12.55 million (2007: Baht 10.77 million).

In addition, during the year 2008 the Company has allocated 5,750,000 warrants (2007: 1,897,500 warrants) to the directors who

are the management of the Company and subsidiary without charge. The details of the warrants are presented in Note 18 to the fi nancial

statements.

10. Property, plant and equipment

Consolidated fi nancial statement

Cost:

As at 31 December 2007 2,226,314,998 6,063,352,525 246,609,302 1,587,594,457 30,383,285 53,454,683 10,207,709,250

Additions 137,700,504 58,571,821 32,891,213 153,796,616 7,637,991 593,173,605 983,771,750

Disposals - (1,984,550) (11,430,066) (14,154,443) (426,916) - (27,995,975)

Transfers in (out) 16,369,492 143,963,059 12,115,614 81,798,868 680,300 (254,927,333) -

As at 31 December 2008 2,380,384,994 6,263,902,855 280,186,063 1,809,035,498 38,274,660 391,700,955 11,163,485,025

Accumulated depreciation:

As at 31 December 2007 - 863,559,037 177,874,646 767,961,522 15,732,155 - 1,825,127,360

Depreciation for the year - 347,268,809 47,122,644 283,068,574 6,675,704 - 684,135,731

Depreciation on disposals - (535,589) (10,240,233) (11,286,116) (426,915) - (22,488,853)

As at 31 December 2008 - 1,210,292,257 214,757,057 1,039,743,980 21,980,944 - 2,486,774,238

Allowance for impairment loss:

As at 31 December 2007 13,000,000 30,000,000 - - - - 43,000,000

Increase during the year - 20,540,000 - - - - 20,540,000

As at 31 December 2008 13,000,000 50,540,000 - - - - 63,540,000

Net book value:

31 December 2007 2,213,314,998 5,169,793,488 68,734,656 819,632,935 14,651,130 53,454,683 8,339,581,890

31 December 2008 2,367,384,994 5,003,070,598 65,429,006 769,291,518 16,293,716 391,700,955 8,613,170,787

Depreciation for the year: (as included in administrative expenses)

2007 616,616,695

2008 684,135,731

Land and landimprovement

Buildings andbuilding

improvement

Computerequipment

Motorvehicles

Assets underinstallationand under

construction

Total

(Unit : Baht)

FurnitureFixtures

and offi ceequipment

75

Separate fi nancial statements

Cost:

As at 31 December 2007 2,226,314,998 6,062,706,808 246,447,879 1,572,046,900 29,786,239 51,198,248 10,188,501,072

Additions 137,700,504 58,571,821 32,833,434 152,933,112 7,637,991 592,906,605 982,583,467

Disposals - (1,984,550) (11,430,066) (13,997,382) (426,916) - (27,838,914)

Transfers in (out) 16,369,492 143,963,059 12,115,614 79,275,433 680,300 (252,403,898) -

As at 31 December 2008 2,380,384,994 6,263,257,138 279,966,861 1,790,258,063 37,677,614 391,700,955 11,143,245,625

Accumulated depreciation:

As at 31 December 2007 - 863,532,449 177,831,650 762,632,857 15,503,315 - 1,819,500,271

Depreciation for the year - 347,204,237 47,078,279 279,383,652 6,556,295 - 680,222,463

Depreciation on disposals - (535,589) (10,240,233) (11,228,140) (426,915) - (22,430,877)

As at 31 December 2008 - 1,210,201,097 214,669,696 1,030,788,369 21,632,695 - 2,477,291,857

Allowance for impairment loss:

As at 31 December 2007 13,000,000 30,000,000 - - - - 43,000,000

Increase during the year - 20,540,000 - - - - 20,540,000

As at 31 December 2008 13,000,000 50,540,000 - - - - 63,540,000

Net book value:

31 December 2007 2,213,314,998 5,169,174,359 68,616,229 809,414,043 14,282,924 51,198,248 8,326,000,801

31 December 2008 2,367,384,994 5,002,516,041 65,297,165 759,469,694 16,044,919 391,700,955 8,602,413,768

Depreciation for the year: (as included in administrative expenses)

2007 613,463,453

2008 680,222,463

Land and landimprovement

Buildings andbuilding

improvement

Computerequipment

Motorvehicles

Assets underinstallationand under

construction

Total

(Unit : Baht)

FurnitureFixtures

and offi ceequipment

As at 31 December 2008, the Company had vehicles and equipment under fi nance lease agreements with net book values amounting

to Baht 34 million.

As at 31 December 2008, certain plant and equipment items have been fully depreciated but are still in use. The original cost of those

assets amounted to approximately Baht 440.2 million (2007: Baht 197.5 million) (The Company only: Baht 440.2 million, 2007: Baht 197.5

million).

As at 31 December 2008, the Company has mortgaged buildings and leasehold rights net book value of Baht 576.5 million (Note 12)

(2007: Baht 603.6 million) to secure credit facilities from banks, as described in Notes 13 and 16.

76

11. Computer software

12. Leasehold rights

Cost

Balance as at 31 December 2007 179,658,574 179,649,118

Acquisitions during the year 31,147,714 31,147,714

Balance as at 31 December 2008 210,806,288 210,796,832

Accumulated amortization

Balance as at 31 December 2007 63,513,981 63,512,146

Amortization for the year 17,130,057 17,129,112

Balance as at 31 December 2008 80,644,038 80,641,258

Net book value

Balance as at 31 December 2007 116,144,593 116,136,972

Balance as at 31 December 2008 130,162,250 130,155,574

Cost

Balance as at 31 December 2007 624,925,311

Acquisitions during the year 236,526,147

Balance as at 31 December 2008 861,451,458

Accumulated amortization

Balance as at 31 December 2007 111,485,667

Amortization for the year 27,002,132

Balance as at 31 December 2008 138,487,799

Net book value

Balance as at 31 December 2007 513,439,644

Balance as at 31 December 2008 722,963,659

13. Bank overdrafts and short-term loans from fi nancial institutions

2008 2007

Short-term loans from fi nancial institutions 3.55 - 4.00 124,823,805 555,000,000

Interest rate

(percent per annum)

(Uni t: Baht)

(Unit : Baht)

(Unit : Baht)

Consolidated fi nancial statement

Consolidated and separate fi nancial statements

Consolidated and separate fi nancial statements

Separate fi nancial statement

77

As at 31 December 2008, the Company had short-term loans in the form of promissory notes totaling Baht 124.8 million (2007: Baht

555.0 million) from two fi nancial institutions and a fi nancial institution, respectively. The loans carry interest at rate of 4.00% per annum (2007:

3.55% per annum) and are not secured. The loans are repayable at call.

As at 31 December 2008 and 2007, the Company had overdraft lines from banks totaling Baht 130 million and Baht 105 million, respec-

tively, and other credit facilities amounting to Baht 4,677 million and Baht 5,342 million, respectively, some of which are secured by leasehold

rights and construction (Notes 10 and 12).

14. Liabilities under fi nancial lease agreements

15. Debentures Debentures of the Company consist of:

2008 20082007 2007

Liabilities under fi nancial lease agreements 9,951,132 14,109,140 5,847,324 10,800,138

Less: Deferred interest expense (655,411) (1,173,517) (376,946) (510,975)

Net 9,295,721 12,935,623 5,470,378 10,289,163

Portion due within one year Portion due over one year

2008 20082007 2007

Unsecured Debentures # 1/2548

Series 1 - 500,000 - 500,000,000

Series 2 500,000 500,000 500,000,000 500,000,000

Unsecured debentures

#1/2551 500,000 - 420,000,000 -

#2/2551 630,000 - 630,000,000 -

Total 1,630,000 1,000,000 1,550,000,000 1,000,000,000

Less: Current portion (660,000,000) (500,000,000)

Debentures - net of current portion 890,000,000 500,000,000

TotalLess than 1 year

Future minimum lease payments 9.95 5.84 15.79

Deferred interest expenses (0.65) (0.37) (1.02)

Present value of future minimum lease payments 9.30 5.47 14.77

1-5 years

(Unit : Baht)

Consolidated and separate fi nancial statements

Consolidated and separate fi nancial statements

The Company has entered into the fi nance lease agreements with leasing companies for rental of motor vehicles and equipment for use

in its operation, whereby it is committed to pay rental on a monthly basis. The terms of the agreements are generally between 3 to 5 years.

Finance lease agreements are non-cancelable.

As at 31 December 2008, Future minimum lease payments required under the fi nance lease agreements were as follows:-

Number of debentures (Unit) Amount (Baht)

(Unit : Baht)

78

At the Extraordinary Meeting of shareholders No. 1/2003 held on 25 April 2003, the shareholders passed a resolution approving the Com-

pany’s issue debentures in an amount of not more than Baht 2,000 million, or the equivalent in foreign currency, to be off ered to the public

or individuals or institutional investors in one or several trances. On 17 March 2005, the Company issued Baht 1,000 million of debentures

as detailed below.

“ The Unsubordinated and Unsecured

Debentures of

Home Product Center Plc.

No. 1/2005 Series 2 Due 2009 “

“ The Unsubordinated and Unsecured

Debentures of

Home Product Center Plc.

No. 1/2005 Series 1 Due 2008”

Name of debentures

Name of debentures

Amounts Baht 500 million Baht 500 million

Term 3 years 4 years

Issue date 17 March 2005 17 March 2005

Interest rate 5.00 percent per annum 5.40 percent per annum

Interest payment schedule Quarterly in March, June, September Quarterly in March, June, September

and December and December

Principal repayment On the redemption date of 17 March 2008 On the redemption date of 17 March 2009

Covenants Maintenance of debt to equity ratios Maintenance of debt to equity ratios

and restrictions on dividend payment and restrictions on dividend payment

Amount Baht 500 million

Term 3 years

Issue date 2 May 2008

Interest rate 4.00% per annum

Interest payment schedule Quarterly in February, May, August and November

Principal repayment 12 quarterly payments totaling Baht 40 million each (the last of Baht 60 million)

starting 2 August 2008 and with the last payment due on 2 May 2011

Covenants Maintenance of debt to equity ratios

In March 2008, the Company repaid Baht 500 million unsecured debentures #1/2548 series 1 in full to the debentures holders.

On 4 April 2007, the Annual General Meeting of Shareholders for the year 2007 approved the Company’s issue of debentures in an

amount of not more than Baht 2,000 million, or the equivalent in another currency. The debentures must have a tenor of no less than 3 years

and no more than 10 years.

On 2 May 2008, the Company issued Baht 500 million of debentures, as detailed below.

“The Principal paid by installment Debentures ofHome Product Center Plc.

No. 1/2008 Due 2011”

79

Name of debentures

Amount Baht 630 million

Term 3 years

Issue date 21 November 2008

Interest rate 5.50% per annum

Interest payment schedule Quarterly in November, February, May and August

Principal repayment On the redemption date of 21 November 2011

Covenants Maintenance of debt to equity ratios and restrictions on dividend payment

“The unsubordinated and unsecured debentures of Home Product Center Plc.

No. 2/2008 due 2011”

On 21 November 2008, the Company issued Baht 630 million of debentures, as detailed below.

16. Long-term loans Details of the Company’s long-term loans are as follows: -

2008 2007

No. Principal Outstanding balances Terms of payment (per installment/month)

Interest Rate

1 1,500,000,000 975,000,000 1,275,000,000 Baht 25 million *

2 100,000,000 - 100,000,000 Baht 33 million **

Total 975,000,000 1,375,000,000

Less: Current portion (300,000,000) (400,000,000)

Long-term loans - net of current portion 675,000,000 975,000,000

* At 4.15% - 6.00% per annum and from 2010 onwards at MLR

** At MLR minus an agreed margin

(Unit : Baht)

Consolidated and separate fi nancial statements

1. The Company has pledged assets and leasehold rights to secure the loans (Note 10 and 12).

2. On 8 June 2007, the Company entered into a Baht 2,000 million loan agreement with a bank. The loans will be repaid in monthly

installments of not less than Baht 33 million each, within 78 months, and are subject to interest at MLR minus an agreed margin.

The loans are secured (in the form of a negative pledge) by some of the Company’s real estate and leasehold rights.

On 28 July 2008, the Company and bank jointly amended the loan agreement to decrease the limit on the facility from Baht 2,000 million

to Baht 845 million. As at result, the Company has the unutilized portion of the facility amounts to Baht 745 million.

The Company has to comply with certain covenants stipulated in the loan agreement such as the maintenance of certain debt to equity ratio.

80

17. Share capital 17.1 On 4 April 2007, the Annual General Meeting of Shareholders approved a Baht 50,400,000 increase in the Company’s registered

share capital, from Baht 1,938,146,860 to Baht 1,988,546,860, through an issue of ordinary shares of Baht 1 each; and the

Company’s amendment of clause 4 of its memorandum of association.

17.2 On 9 April 2008, the Annual General Meeting of Shareholders approved a Baht 2,078,714 decrease in the Company’s registered

share capital, in respect of expiration of ESOP-W1 totaling 987,487 units.

Reconciliation of number of ordinary shares

Registered share capital

Number of ordinary shares at beginning of year 1,988,546,860 1,938,146,860

Increase in registered share capital due to issuing ESOP-W4 - 50,400,000

Decrease in registered share capital due to expiration of ESOP-W1 (2,078,714) -

Number of ordinary shares at end of year 1,986,468,146 1,988,546,860

Issued and paid-up share capital

Number of ordinary shares at beginning of year 1,924,920,422 1,919,818,404

Increase from the exercise of

ESOP-W1, ESOP-W2, ESOP-W3 and ESOP-W4 8,690,178 5,102,018

Number of ordinary shares at end of year 1,933,610,600 1,924,920,422

For the years ended 31 December

18. Warrants In September 2004, the Company proceeded with the fi rst issue of warrants to (ESOP-W1) the employees in accordance with a resolution

of the Annual General Meeting of Shareholders for the year 2004. It issued a total of 15,000,000 warrants, and one warrant can be exercised

to purchase 1 ordinary share at a price of Baht 1 each, with exercise dates every three months and a term of 3 years.

In February 2006, the Company proceeded with the second issue of warrants (ESOP-W2) to the employees, in accordance with the

resolution of the Annual General Meeting of Shareholders for the year 2005. It issued a total of 7,000,000 warrants, and each warrant can be

exercised to purchase 1 ordinary share at a price of Baht 1 each, with exercise dates every three months and a term of 3 years.

As a result of the Company’s allotment of 7,000,000 ordinary share warrants to employees (ESOP-W2), the exercise ratio of the fi rst issue of

warrants to purchase ordinary shares to employees (ESOP-W1) was adjusted such that 1 warrant can be exercised to purchase 1.006 ordinary

shares at a price of Baht 1 per share, eff ective from 28 February 2006 onwards.

In October 2006, the Company resolved to increase its share capital and this aff ected the exercise of the fi rst and second issues of war-

rants allotted to the employees of the Company (ESOP-W1 and W2) as follows:

• One warrant of the fi rst issue of warrants allotted to employees of the Company (ESOP-W1) can be exercised to purchase 1.811

ordinary shares at a price of Baht 1 per share.

• One warrant of the second issue of warrants allotted to employees of the Company (ESOP-W2) can be exercised to purchase 1.800

ordinary shares at a price of Baht 1 per share.

2008 2007

(Unit : Shares)

81

On 2 April 2007, the Company issued 15,000,000 warrants (ESOP-W3) to its employees in accordance with the resolution passed by the

2006 Annual General Meeting of Shareholders. Each warrant can be exercised to purchase one ordinary share at a price of Baht 1, and the

exercise dates are every three months and a term of 3 years. The issue of ESOP-W3 has eff ected the exercise of ESOP-W1 and ESOP-W2 as

follows: -

• One warrant of the fi rst issue of warrants allotted to employees of the Company (ESOP-W1) can be exercised to purchase 1.822

ordinary shares at a price of Baht 1 per share.

• One warrant of the second issue of warrants allotted to employees of the Company (ESOP-W2) can be exercised to purchase 1.811

ordinary shares at a price of Baht 1 per share.

On 23 May 2008, the Annual General Meeting of the Shareholders for the year 2007 approved the Company’s issue of 50,000,000 warrants

(ESOP-W4) to its employees. Each warrant can be exercised to purchase 1 ordinary share, and has a term of 5 years, with no more than 20%

of the issued warrants to be exercised each year. The exercise price is calculated at a 20% discount on the 30-day average closing price of the

Company’s shares. The issue of ESOP-W4 has aff ected the exercise of ESOP-W2 and ESOP-W3 as follows: -

• One warrant of the issue of warrants allotted to employees of the Company (ESOP-W2) can be exercised to purchase 1.823 ordinary

shares at a price of Baht 1 per share.

• One warrant of the issue of warrants allotted to employees of the Company (ESOP-W3) can be exercised to purchase 1.007 ordinary

shares at a price of Baht 1 per share.

The holders of the warrants have exercised their rights as summarized below.

Exercised date

Number of exercised warrants

ESOP-W1

(Units)

ESOP-W2

(Units)

ESOP-W3

(Units)

ESOP-W4

(Units)

Number ofshares fromexercise ofwarrants(Shares)

Value of ordinary

shares fromexercise ofwarrants

(Baht)

Paid-up capital Date of registration

with theMinistry ofCommerce

(Shares) (Baht)

Beginning balance

1 January 2007 13,511,689 6,951,800 - - - - 1,919,818,404 1,919,818,404 -

28 February 2007 279,396 - - - 505,982 505,982 1,920,324,386 1,920,324,386 7 March 2007

30 May 2007 182,528 30,000 3,872,816 - 4,259,711 4,259,711 1,924,584,097 1,924,584,097 11 June 2007

31 August 2007 38,900 - 237,550 - 308,425 308,425 1,924,892,522 1,924,892,522 12 September 2007

30 November 2007 - - 27,900 - 27,900 27,900 1,924,920,422 1,924,920,422 11 December 2007

29 February 2008 - - 60,000 - 60,000 60,000 1,924,980,422 1,924,980,422 12 March 2008

30 May 2008 - - 4,679,142 3,482,200 8,194,003 8,194,003 1,933,174,425 1,933,174,425 12 June 2008

31 August 2008 - - 111,845 246,100 358,722 358,722 1,933,533,147 1,933,533,147 11 September 2008

30 November 2008 - - 76,915 - 77,453 77,453 1,933,610,600 1,933,610,600 9 December 2008

Total 14,012,513 6,981,800 9,066,168 3,728,300

Number of issued warrants 15,000,000 7,000,000 15,000,000 50,000,000

Number of

exercised warrants (14,012,513) (6,981,800) (9,066,168) (3,728,300)

Number of expired warrants (987,487) - - -

Number of

unexercised warrants - 18,200 5,933,832 46,271,700

82

19. 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 percent of its net income after deducting accumulated defi cit brought forward (if any), until the reserve reaches 10 percent of the

registered capital. The statutory reserve is not available for dividend distribution.

20. Expenses by nature Signifi cant expenses by nature are as follow:

2008 2008 20082007 2007 2007

Employee remuneration 1,272 1,011 1,272 1,011

Premises expenses 789 700 741 652

Depreciation and amortization 728 657 724 654

Sales promotion and operation support expenses 1,156 1,005 1,143 986

Financial costs 134 175 136 177

Income tax 392 269 390 267

Changes in inventories of fi nished goods 294 125 294 125

21. Earnings per share Basic earnings per share is calculated by dividing the net income for the year by the weighted average number of ordinary shares in

issue during the year.

Diluted earnings per share is calculated by dividing net income for the year by the weighted average number of ordinary shares in

issue during the year 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 period or on the

date the potential ordinary shares were issued.

The following table sets forth the computation of basic and diluted earnings per share:

Consolidated fi nancial statementsFor the years ended 31 December

Net income (Baht)Weighted average numberof ordinary shares (shares)

Earnings per share (Baht)

Basic earnings per share

Net income attributable to equity

holders of the parent 959,418,953 710,375,364 1,929,865,525 1,922,860,405 0.50 0.37

Eff ect of dilutive potential ordinary shares - - 10,697,835 10,853,626

Diluted earnings per share

Net income of ordinary shareholders

assuming the conversion of warrants to

ordinary shares 959,418,953 710,375,364 1,940,563,360 1,933,714,031 0.49 0.37

(Unit : Million Baht)

2008 2007 2008 2007

Consolidated fi nancial statement Separate fi nancial statement

83

2008 2008 20082007 2007 2007

Separate fi nancial statementsFor the years ended 31 December

Net income (Baht)Weighted average numberof ordinary shares (shares) Earnings per share (Baht)

Basic earnings per share

Net income attributable to equity

holders of the parent 953,946,185 704,775,741 1,929,865,525 1,922,860,405 0.49 0.37

Eff ect of dilutive potential ordinary shares - - 10,697,835 10,853,626

Diluted earnings per share

Net income of ordinary shareholders

assuming the conversion of warrants to

ordinary shares 953,946,185 704,775,741 1,940,563,360 1,933,714,031 0.49 0.36

22. Financial information by segment The majority of the operations of the Company and subsidiary involve the business segments of trading of a complete range of

materials for construction, repair and maintenance of buildings and residences, and provision of related services, together with space rental

(as having revenue and assets less than 10 percent of total revenue and total assets of all segments) and are carried on in a single geographic

area, Thailand. As a result, all revenues, operating profi ts and assets as refl ected in these fi nancial statements pertain to the aforementioned

trading industry and geographic area.

23. Provident fund The Company and its employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both

employees and the Company contributed to the fund monthly at the rate of 3 - 5 percent 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

2008, the Company contributed Baht 23.98 million (2007: Baht 20.86 million) to the fund.

24. Dividend paid Dividends declared during the years 2008 and 2007 consisted of the followings: -

Approved by Total dividendsDividendper share

Paid on

Final dividend from 2006 Annual General Meeting

retained earnings of the shareholders on 4 April 2007 230.44 0.12 27 April 2007

Final dividend from 2007 Annual General Meeting

retained earnings of the shareholders on 9 April 2008 346.49 0.18 8 May 2008

84

25. Commitments and contingent liabilities 25.1 As at 31 December 2008 and 2007, the Company has commitments totaling Baht 75.90 million and Baht 116.18

million, respectively, to a bank and fi ve fi nancial institutions in respect of guarantees provided for leasing, purchases of goods or hire

of work, as bonds with State Enterprise.

25.2 As at 31 December 2008, the Company has commitments under letters of credit opened with two commercial banks,

amounting to USD 1.99 million (2007: three commercial banks amounting to USD 2.40 million).

26. Commitments under long-term lease agreements 26.1 Long-term lease agreements - as lease

a) The Company has entered into eight land lease agreements. The terms of the agreements are generally between 26 to 30

years and they are non cancelable, except with the consent of the counterparties.

As at 31 December 2008, future minimum lease payments required under these non-cancellable operating leases contracts

were as follows:

Payable within: Million Baht

1 year 39.5

2 to 5 years 179.0

Thereafter 946.4

1,164.9

b) The Company has entered into 17 lease agreements to lease commercial space. The terms of the agreements are generally

between 17 to 30 years and they are not cancelable, except with the consent of the counterparties.

As at 31 December 2008, future minimum lease payments required under these non-cancellable operating leases contracts

were as follows:

Payable within: Million Baht

1 year 80.3

2 to 5 years 343.9

Thereafter 1,423.2

1,847.4

26.2 Long-term lease agreements - as leaser

The Company has entered into seven agreements with two companies to lease and sub-lease parts of premises in 5 branches

for periods of 29-30 years, with contract values amounting to Baht 640.49 million. The terms of the agreements are until 2033 -

2036. The Company recognizes this income systematically on a straight-line basis over the useful lives of the leaseholds.

The outstanding balance of rental received in advance as of 31 December 2008 was Baht 542.8 million (2007: Baht 564.4 million).

85

27. Financial instruments 27.1 Financial risk management

The Company’s fi nancial instruments, as defi ned under Thai Accounting Standard No. 48 “Financial Instruments: Disclosure and

Presentations”, principally comprise cash and cash equivalents, trade accounts receivable, other receivables, short-term loans, debentures

and long-term loans. The fi nancial risks associated with these fi nancial instruments and how they are managed is described below.

Credit risk

The Company is exposed to credit risk primarily with respect to trade accounts receivable and other receivable. The Company

manages the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material

fi nancial 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 accounts receivable and others receivable as

stated in the balance sheet.

Interest rate risk

The Company’s exposure to interest rate risk relates primarily to its deposits with fi nancial institutions, short-term loans,

debentures and long-term loans. However, since the Company’s fi nancial assets and some of its fi nancial liabilities bear fl oating

interest rates and some of fi nancial liabilities bear fi xed interest rates which are close to the market rate, the interest rate risk is

expected to be minimal.

Signifi cant fi nancial assets and liabilities as at 31 December 2008, classifi ed by type of interest rate, are summarized in the

table below, with those fi nancial assets and liabilities that carry fi xed interest rates further classifi ed based on the maturity date,

or the repricing date if this occurs before the maturity date.

Fixed interest rates

Within1 year

Over1-5 years

Over5 years

Floatinginterest rate

Non-interestbearing

Interest rate(% p.a.)Total

Financial assets

Cash and cash equivalent 435,000,000 - - 40,594,238 128,193,912 603,788,150 0.75 - 3.00

Financial liabilities

Bank overdraft and short-term

loans from fi nancial institutions 124,823,805 - - - - 124,823,805 4.00

Debentures 660,000,000 890,000,000 - - - 1,550,000,000 4.00 - 5.50

Long-term loans 300,000,000 675,000,000* - - - 975,000,000 6.00

1,084,823,805 1,565,000,000 - - - 2,649,823,805

* Long-term loans of Baht 550 million being installed during 2010 to 2012 with fl oating interest rate at MLR.

Consolidated fi nancial statement

(Unit : Baht)

86

Financial assets

Cash and cash equivalent 435,000,000 - - 17,467,548 127,427,137 579,894,685 0.75 - 3.00

Financial liabilities

Banks overdraft and short-term

loans from fi nancial institutions 124,823,805 - - - - 124,823,805 4.00

Short-term loans from

related party 60,000,000 - - - - 60,000,000 3.40 - 4.25

Debentures 660,000,000 890,000,000 - - - 1,550,000,000 4.00 - 5.50

Long-term loans 300,000,000 675,000,000* - - - 975,000,000 6.00

1,144,823,805 1,565,000,000 - - - 2,709,823,805

Average exchange rate as at 31 December 2008(Baht per dollar)

Foreign currency Financial liabilities (Dollar)

USD 10,363 35.0824

* Long-term loans of Baht 550 million being installed during 2010 to 2012 with fl oating interest rate at MLR.

Foreign currency risk

The Company’s exposure to foreign currency risk arises mainly from good purchase transactions that are denominated in foreign

currencies. The Company has not entered into forward exchange contracts to hedge this risk.

The balances of fi nancial liabilities denominated in foreign currencies as at 31 December 2008 are summarized below.

27.2 Fair values of fi nancial instruments

Since some of the Company’s fi nancial assets and liabilities are short-term in nature and loans bear interest at rates close

to market rate or fl oating interest rates, their fair value is not expected to be materially diff erent from the amounts presented in

the balance sheets.

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 fi nancial instrument or by

using an appropriate valuation technique, depending on the nature of the instrument.

(Unit : Baht)

Fixed interest rates

Within1 year

Over1-5 years

Over5 years

Floatinginterest rate

Non-interestbearing

Interest rate(% p.a.)Total

Separate fi nancial statement

87

Leasehold right and computer software - net - 629,584,237

Leasehold right - net 116,144,593 -

Computer software - net 513,439,644 -

Leasehold right and computer software - net - 629,576,616

Leasehold right - net 116,136,972 -

Computer software - net 513,439,644 -

Reclassifi ed

Reclassifi ed

Previously reported

Previously reported

28. Capital management The primary objectives of the Company and its subsidiary capital management are to ensure that it has an appropriate fi nancing

structure and preserves the ability to continue its business as a going concern.

As at 31 December 2008, total debt to equity ratio in the consolidated fi nancial statements is 1.70:1 (the separate fi nancial statements:

total debt to equity ratio is 1.69:1).

29. Subsequent event On 19 February 2009, the Meeting of the Company’s directors passed a resolution to propose the following matters to the meeting of

shareholders.

29.1 The Company paying a dividend of 1,934 million shares at Baht 0.35 each, totaling Baht 676.7 million, to its shareholders.

29.2 The Company increasing its share capital from Baht 1,986,468,146 to Baht 2,001,199,838 to support the exercise of warrant to

be allocated to employees of the Company (ESOP-W4) for which the exercise rights are to be adjusted.

30. Reclassifi cation Certain amounts in the fi nancial statements for the year ended 31 December 2007 have been reclassifi ed to conform to the current

year’s classifi cation but with no eff ect to previously reported net income or shareholders’ equity. The reclassifi cations are as follow:

(Unit : Baht)

(Unit : Baht)

Consolidated fi nancial statement

Separate fi nancial statement

31. Approval of fi nancial statements These fi nancial statements were authorized for issue by the Company’s Board of Directors on 19 February 2009.

88

Mr.Pong Sarasin

Director

Mr.Anant Asavabhokhin

Chairman

Mr.Manit Udomkunnatum

Director and Chairman of the Executive Directors

Mr.Joompol Meesook

Director

Mr. Naporn Soonthornchitcharoen

Director and Executive Director

Mr. Khunawut Thumpomkul

Director, Executive Director and Managing Director

Board of Directors

Mr. Chanin Roonsumran

Independent Director, Audit Committee and Nomination and Remuneration Committee

Mrs.Suwanna Buddhaprasart

Director

Mr.Rutt Phanijphand

Director, Executive Director and Chairman of the Nomination

and Remuneration Committee

Mr.Apichat Natasilpa

Director and Nomination and Remuneration Committee

Mr. Apilas Osatanon

Independent Director andChairman of the Audit Committee

Mr. Thaveevat Tatiyamaneekul

Independent Director and Audit Committee

www.homepro.co.th

Continued Growth

A n n u a l R e p o r t 2 0 0 8

Home Product Center Plc. 96/27 Moo 9 Tambon Bangkhen, Amphoe Muang, Nonthaburi 11000

Tel. (66) 02-832-1000 Fax. (66) 02-832-1400

Ho

meP

ro l A

n n u a l R e p o r t 2 0 0 8

Rangsit 02-958-5699

Rattanathibet 02-921-2400

Fashion Island 02-947-6365

Future Mart 02-689-0844

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