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Message from the chairman

 

IN 2017, THAILAND’S OVERALL ECONOMY EXPERIENCED SIGNS OF RECOVERY, WITH GROWTH RATE OF 4% FROM THE PREVIOUS YEAR. THE GROWTH MAINLY STEMMED FROM THE RECOVERY OF EXPORT AND TOURISM, POWERED BY THE GOVERNMENT’S ECONOMIC STIMULATION POLICIES THAT HELPED LOW-INCOME PERSONS UNDER THE GOVERNMENT PROJECT ENTITLED 9101 IN HONOR OF HIS MAJESTY THE LATE KING FOR SUSTAINABLE AGRICULTURAL DEVELOPMENT AND SPECIAL BUDGET STIMULANTS. ALTHOUGH THE ECONOMY IN 2017 WAS BETTER THAN IN 2016, SOME BUSINESS UNITS WITHIN THE MBK PUBLIC COMPANY LIMITED (“MBK”) AND ITS AFFILIATED COMPANIES (“THE MBK GROUP”) STILL SUFFERED SOME IMPACTS FROM THE OVERALL ECONOMIC FACTORS. NEVERTHELESS, THE MBK GROUP REMAINS COMMITTED TO DEVELOP AND BUILD CAPABILITY AND POTENTIAL WITHIN THE ORGANIZATION TO MAINTAIN RETURNS TO SHAREHOLDERS SUSTAINABLY IN THE LONG RUN.

The overall operating results of the MBK GROUP for the year ended 31st December 2017 in comparison with the year 2016, decreased. The total operating revenues were THB 10,497 million, approximately THB 771 million decrease, or about 7%. The net profit attributable to equity holders of the Company was THB 1,841 million, approximately THB 214 million decrease or about 10%. The Group’s business segment that experienced better performance was the Finance Business whose growth stemmed from the growth of loan portfolio. On the other hand, Real Estate Business’s results were lower as a result of the completion of Quinn Condominium’s project and its revenue recognition mainly in 2015 and 2016. The Food Solution Business also experienced lower results due to the decline of rice order under Government to Government (G to G) project. The financial position of the MBK GROUP as of 31st December 2017, compared with that of 2016, recorded major changes, as follows: the total assets were THB 46,552 million, or an increase of THB 4,034 million or 9%, the total liabilities were THB 24,367 million, or an increase of THB 2,201 million or 10%, The total liabilities comprised borrowings of THB 12,858 million, long-term lease liabilities under financial lease agreements of THB 5,000 million, advance rental and service deposits of THB 1,602 million, deferred tax liabilities of THB 1,627 million, and other liabilities of THB 3,280 million, and the total shareholders’ equity was THB 22,185 million, an increase of THB 1,833 million or 9%.

In 2017, the MBK GROUP had major operations, as follows:

Shopping Center Business. The MBK Shopping Center has been renovated and developed consistently to maintain its position as the one of the top tourist destination. The exterior renovation was completed in the past year as well. In addition, the logo of the MBK Shopping Center has been updated to reflect the personality of the MBK Shopping Center as a “Local Professional Art,” representing the city of colors, diversity, local lifestyles that anyone wants to explore, and unexpected experience, to reinforce its stance as the landmark of happiness in Pathumwan area. The MBK Shopping Center and its partners in Siam Square area joined hands under “SIAM SYNERGY” project to build physical connectivity with “One Siam, Skywalk.” The Skywalk strengthens the area’s reputation and recognition among foreign tourists, while reinforces its presence among Thai visitors. The MBK Shopping Center also underwent some interior renovations of rental space and shared space on G, 4th and 6th floor and added escalators on the 3rd floor that connects with 4th floor for greater convenience, modernity, and satisfaction of renters and visitors. Additionally, in mid-2017, the MBK Shopping Center launched the MBK GROUP Application in delivering news, promotion, marketing activities, discounts, and special privileges to customers. To date, more than 33,000 customers are using the application to serve different lifestyle needs. In July 2017, the MBK’s affiliates have purchased more shares of the Company where operates Paradise Park Shopping Center and the Company where operates Paradise Place building (original name was “HaHa Shopping Center”), resulting in proportion of shares holding of those affiliates is higher to 100%.

Another development in the Shopping Center Business was a joint-venture between the Company and its business partners, ICONSIAM, the major development project that will comprise of a shopping center and a condominium. The ICONSIAM is located on Chareon Nakorn Road. At present, the project is under construction and its area as a shopping center is expected to open at the end of 2018.

Hotel and Tourism Business. The business unit is committed in consistently developing its service capability to hold an international standard and in improving its infrastructure systems. Guestroom renovation, service improvement, and the installation of amenities have been in place to enhance convenience and modernity, while meeting the needs of customers and service users for the utmost satisfaction. A great example was the performance of Dusit Thani Krabi Beach Resort, whose growth came from the participation and standard certification by Thailand Convention and Exhibition Bureau (TCEB) since 2015. Customers and service users can be confident in the quality and standard of the hotel’s services. Such confidence, combined with the beautiful scenery of the hotel, makes it highly popular among tourists from China, Europe, and Scandinavia.

Moreover, the Tinidee Golf Resort @ Phuket, a hotel located within The Loch Palm Golf Course and The Red Mountain Golf Course in Phuket, also increased number of guestrooms in the Loch Palm Residence to provide the luxury and private experience to all guests and golfers alike in the Suite rooms. The improvement also included different types of rooms for different customers’ needs. Eventually, these improvements have led to greater sales to the hotels.

The Golf Business. The Golf Business has provided services with 5 golf courses which are divided into 2 golf courses in Phuket the Loch Palm Golf Course and the Red Mountain Golf Course which are recognized by both Thai and foreign golfers. The Golf Courses received several awards from TripAdvisor, Asian Golf Award, HAPA, Thailand Best Golf Courses, and Best of Thailand Awards voted by the Chinese tourists - and 3 golf courses in Pathumthani - Riverdale Golf Club and Country Club and Bangkok Golf Club. The latter offered both Day Golf and Night Golf for the convenience of golfers in Bangkok and its peripheral. Additionally, consistent improvements of the greens and club house are in place to increase users’ satisfaction. Another golf course is the Lum Luk Ka Country Club, also located in Pathumthani province. The contracts to form strategic alliance with leading golf courses in other countries have also been formed, making the unit’s Golf Business more diverse and enabling the unit to serve to customers’ needs.

Real Estate Business. The business unit engages in business operations of land development for sales, property management, consultancy, and asset appraisal businesses. It is consisted of experienced teams who have expertise in real estate. In 2017, the majority of income came from the success and positive feedback of Quinn Condominium and the income has been gradually recognized throughout 2016. Nevertheless, the Business is determined to continuously pursue project development. The unit develops an addition of residential building along Sukhumvit BTS line, worth more than THB 2 billion. The Project is expected to launch by Q3 of 2018. The business unit also has plans to develop stand-alone houses and twin houses and will launch the residential project near Rama IX road. The project’s house format is modern, luxury, and nature-bound. The project’s worth is more than THB 500 million and is expected to start selling in Q1 of 2018.

For the residential project in Pathumthani, there are two projects: Park Riverdale, worth THB 700 million, and Riverdale Residence, worth THB 1.5 billion. The projects generated income recognition of more than THB 200 million in 2017. Both projects are expected to close its sale by 2019. Moreover, the residential project in Phuket, in 2017, the unit already launched the Loch Palm Residence. The project is located on the four plots of land in the Loch Palm Golf Course, approximately worth THB 70 million. In the upcoming future, there are plans to improve and develops those land plots around the golf club.

Food Solution Business. The business unit operates food business by the Pathum Rice Mill and Granary Public Company Limited or PRG. In 2017, rice business faced various challenges, from the price fluctuation of raw materials and intense price competition. Nonetheless, the Food Solution Business is committed in strategies, centered upon product quality development, cost control of its manufacturing process, sale, marketing, and reputation of quality products. These efforts aim to create and reinforce the potential and reputation of the brand among consumers that represent goodness delivery to end consumers. In term of safety standards from the beginning to the end of customers’ consumption, some rice under trademarks, “Mahboonkrong Rice” and “Mahboonkrong Rice Plus” are available both domestically and internationally; they have earned trusts and are able to participate as the rice manufacturer for the Department of Foreign Trade (DFT), the Ministry of Commerce, the representative of Thai government in the Government-to-Government (G to G) rice purchase agreement. With regular development and maintenance of quality, PRG received an honorable trophy with Picture of Hands in Prayer Position for Hom Mali Rice in Packaging, the award certifying quality rice and its consistent quality standard. The brand is awarded this certification for ten consecutive years from the Department of Internal Trade (DIT), the Ministry of Commerce.

Moreover, the business unit has increased its investment in the restaurant and food court business, by focusing on establishing service standards and product development to ensure its potential to serve customers’ various needs in 2017. At the same time, the unit underwent re-branding and re-conceptualizing products of products and services under Hina Japanese Restaurant’s brand to enhance its selling point as the Japanese fusion food under “Craft Japanese Culinary” concept in order to serve the changing behaviors of consumers and customer groups of the shopping centers that the particular restaurants are located in. Additionally, the unit expanded its investment in operating as the central kitchen to increase the quality standards of raw materials and food from the restaurants, and to support the restaurant branches expansion. However, the restaurant and food court business are considered a small business, still; so, its revenues and profit may not be yet generated in a significant volume to the entire the MBK GROUP.

Finance Business. The business unit is engaged in retail loan businesses for condominium purchase and secured loans with valuable real estate as collaterals. The collateral must be located in good areas, have high potential for commercial development, and be in the market’s demands. In addition, the business unit also provides loans for new motorcycles and life insurance. The latter provides life assurance services for both individuals and groups. Services include endowment, protection, as well as health products for individuals, institutional customers, and other organizations. The operating results of the unit in 2017 recorded satisfactory growth from the consistently growing loan portfolio and the expansion of motorcycle hire purchase markets that expands more medium-sized and large-sized motorcycles resulting in higher income, in comparison to 2016. Besides, the Business is also committed to consistently develop products and services to strengthen its potential in its business operation and to increase business efficiency.

Other Business. The Apple Auto Auction (Thailand) Company Limited (“AAA”) is engaged in car auction business that brings appraisal and vehicle inspection standards from Japan. In 2017, the Company has increased its car storage in the upcountry provinces for an increase in number of cars at the auction. To date, car storage is spread across 13 provinces nationwide. In 2018, the Company plans to launch services in 3 other provinces, totaling to its 16-province presence. Additionally, the Company also develops inspection system that can be viewed on tablets and central price system, or “Apple Auction Book,” enabling both buyers and sellers to view the medium price of the previously auctioned cars or the auction price of the cars, as well as its auctioned price in a simple, convenient, and quick manner. The Company’s website will also be redesigned for improved, modern, and accessible formats. Besides, another channel is Mobile Live Bird Application (IOS, Android), the online auction platform for new generation.

Supporting Business. The main function of this important unit is to be consultant and support main businesses of the MBK GROUP with employees with diversity of expertise and experience in the business. The Supporting Business encourages the use of technology to increase the potential and competence of businesses in the MBK GROUP, providing the following supports. For Service, this Business Unit will instill service-mindedness and service standards that are aligned with customers’ satisfaction. For Process, the Business Unit can help improve business process with technology and innovation. It is also beneficial to also use CRM, the MBK GROUP Application, and e-Procurement. For Resource Sharing, human resource, procurement, and technology can greatly enhance our competitiveness and utmost beneficial. For Human Capital and Personnel Development, it is essential to instill corporate culture and develop human resource system, gearing them towards professionalism which will ultimately result in sustainable competitiveness. For Brand Management, the MBK GROUP’s brands must be maintained and developed for brand’s strength sustainably.

For Corporate Governance, the Company remains committed, dedicated, and adhered to Good Corporate Governance principles in its operation. With our beliefs, the Company considers value creation to the organization in a sustainable manner, operates businesses in a transparent, fair, and socially and environmentally friendly manner, and interacts with all stakeholders fairly. Our commitment and practices have reflected in the Corporate Governance Report of Thai Listed Companies 2017, awarded by SET Thailand, SEC Thailand, and the Thai Institute of Directors (IOD). MBK is one of 110 companies who received “Excellent” or 5-star out of 620 participating companies.

For our social and environmental responsibility, the Company realizes and emphasizes the importance of the support and promotion of community and society via various programs, for instance, energy conservation, by-products and waste reduction from business process, creative trash management, as well as employees’ sharing and public service activities for holistic social and environmental development in a sustainable manner.

On behalf of the Board of Directors of the Company, we would like to extend our gratitude towards our shareholders, customers, partners, executives, employees, and other stakeholders who have supported the business operations of the MBK GROUP. With our determination and commitment, the MBK GROUP pursues professional management that ceaselessly steps forward by seeking investment opportunities in new businesses that are relevant and have high growth potential. These efforts lay stepping stones for us in becoming the nation’s leading business group in the future with high potential and value-added investment and consistent growth for our shareholders sustainably.

 

Mr. Banterng Tantivit
Chairman

Mr. Suphadej Poonpipat
Vice Chairman

Mr. Suvait Theeravachirakul
President