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Annual Report 2008 Siam Makro Public Company Limited
Annual Report 2008
Siam Makro Public Company Limited
Company Profile 1
Financial Highlights 2
Messages from the Board of Directors 4
Audit Committee’s Report 7
Management Discussion and Analysis 9
Makro Cash and Carry 14
Makro Retailer Alliance (“MRA”) Project 18
Siam Food Services 21
Industry and Competitive Environment 23
Looking to the Future 26
Risk Factors 28
Corporate Achievements 31
Other Information 33
Report of the Board of Directors’ Responsibilities for Financial Statements 68
Financial Statements 69
Makro and Siam Food Services’ Locations 115
CONTENTS
VISIONMakro in Thailand always strives to continue to be the leading Cash & Carry operator,
distributing Food and Non Food products to our registered customers,
providing the best buying conditions and solutions for our professional customers.
Makro Retailer Alliance (“MRA”)In order to improve the ability of small retailers, Makro continued to conduct various activities
under the MRA projects in 2008 including organised regional training project for small retailers by
holding seminars as well as providing advisory service on all aspects of retail business management
and visited stores of members who requested for assistance to make assessment
and provided integrated advice.
Under the MRA project, Makro opened the MRA Centre in 2008 as a centre to provide advice
on retail business management to small retailers. Makro also organised “Retailer Expo”, which
featured tradeshow activity, organised seminars to provide knowledge on retail business
management and exchanging view on operating sustainable regional small retail businesses.
Makro Provides Support for
Customers’ Sustainable Growth
Makro HoReCa ExtravaganzaThe 3rd Makro HoReCa Extravaganza was held on March 2008 with an objective
to promote Makro’s professional food service provider image. The event also provided
a unique opportunity for over 260 specialised HoReCa assortment suppliers
to meet with Makro’s customers. The event attracted approximately 60,000 visitors.
Makro HoReCa Extravaganza Provides
New Ideas for Business GrowthThe event featured a full range of activities such as talk shows by industry experts,
cooking demonstrations, culinary contests and seminars on various food topics, etc.
Focus On New InitiativesMakro continued remodeling projects in 2008 including bakery project, spice project,
health and wellness department expansion, Non Food re-layout,
expand assortment and install air-condition in small stores to improve
customers’ shopping experience.
Distribution Centre for Fresh
and Frozen ProductA new Distribution Centre for Fresh and Frozen Product was opened in June 2008
with a focus on distribution efficiency and food safety standard.
Human Resources
DevelopmentMakro focus on continual development
of our people. The staffs will be given
opportunity to develop through various
training initiatives to prepare them not
only for today’s challenges but also
for future growths.
Social ContributionMakro is committed to our responsibility to
the society and we encourage our employees to
participate in social activities in the areas
where we operate. In addition, Makro established
the MRA project to help small retailers,
which is part of Thai culture, to improve
their ability to compete.
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� Growth through Performance
� Go for Niche and Market Share
� Invest in People
� Manage Change
� Look for the Unusual
� Listen, Learn and React
� Keep Things Simple
CORPORATE PHILOSOPHY
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� We shall be the one-stop supplier for
our professional customers; Retailers,
HoReCa (Hotels, Restaurants and Caterers)
and Service Providers.
� We shall always fulfil and maintain
our customers’ satisfaction, providing
quality products at competitive prices with
full availability to our core customers.
� We shall work in collaboration with
our business partners for the continuous
improvement of efficiency, giving an
increase in mutual benefits for all parties.
� We shall operate our business professionally,
committing ourselves to the principles of good
corporate governance, by recognising the
importance of our human resources, the good
relationship with our community and society
and the appropriate added value for
our stakeholders.
MISSION
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The principle business of Siam Makro Public Company Limited (“the Company”) is the operation of Wholesale
Cash and Carry Trade Centres, registered under the name of “Makro” throughout Thailand. Currently, there are
41 Makro stores of varying sizes, 8 stores are located within the Greater Bangkok area and 33 stores are in the
provinces. Each store is ideally positioned geographically to be easily accessible by all its customers. Every store
offers a product range and assortment designed specifically for the customers' changing needs and expectations.
With a registered customer base of over 2 million, the Company continues to successfully sell food and non food
products to a multitude of Clientele operating in a wide range of industries. The main focus being small to
medium size businesses, predominantly small retailers, HoReCa (Hotels, Restaurants and Caterers), institutions,
professional customers and also the service sectors.
The Company has two 99.9% owned subsidiary businesses. Siam Food Services Limited (“SFS”) is a leading
provider of premium food products, value-added services and logistic services to the hospitality and food service
industry nation-wide. It specialises in supplying highly specific frozen and chilled meat, seafood, poultry,
seasonings, etc. SFS currently operates from 2 locations, one in Bangkok and the other in upcountry. Makro
Properties Limited (“MPL”) is a land investment company and a number of Makro stores are located on land
owned by MPL.
Siam Makro Public Company Limited is part of the SHV group, a privately held Dutch group, which operates a
diversified portfolio of businesses across the globe. Makro Cash and Carry is currently trading in 6 countries with
over 165 stores worldwide. In Thailand, an experienced professional management team based at the head office
in Bangkok manages the Company and is supported by a store management team at each of its stores.
The Group employed 4,920 staffs including employees of Siam Food Services.
Siam Makro Public Company Limited shares are listed on the Stock Exchange of Thailand with a total registered
share capital of 240 million shares and has par value of Baht 10 each fully paid-up as at 31st December 2008 of
Baht 2,400 million. The total shareholders' equity as at the end of 2008 was Baht 8,528 million, an increased by
Baht 234 million from 2007. Total revenues for 2008 was Baht 74,310 million and the net earning after tax was
Baht 1,674 million, an increase of 16.2% and 29.6% from those of last year respectively.
COMPANY PROFILE
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Unit : Baht Million Change (%)
2008 2007 2006 2008/2007 2007/2006
(Restated)
Total assets 18,750 18,497 17,045 1.4 8.5
Total liabilities 12,000 12,008 10,109 (0.1) 18.8
Share capital 2,400 2,400 2,400 0.0 0.0
Shareholders’ equity 6,750 6,489 6,936 4.0 (6.4)
Sales 70,790 59,909 53,285 18.2 12.4
Total revenues 73,180 61,899 55,141 18.2 12.3
Gross profit 4,600 3,752 2,899 22.6 29.4
Net profit for the year 1,701 1,293 991 31.6 30.5
Earnings per share for the year (Baht) 7.09 5.39 4.13 31.6 30.5
Par value per share (Baht) 10.00 10.00 10.00 0.0 0.0
Book value per share (Baht) 28.13 27.04 28.90 4.0 (6.4)
Dividend per share (Baht) 6.50 5.25 5.50 23.8 (4.5)
Net profit margin for the year (%) 2.3 2.1 1.8
Return on equity (%) 25.7 19.3 14.0
Return on total assets (%) 9.1 7.3 5.8
Dividend pay out ratio (%) 91.7 97.5 133.2
Remark :
(1) Restated due to change in accounting policy for investments in subsidiaries from the equity method to the cost
method in compliance with the Federation of Accounting Professions’ announcement No. 26/2549 and No.
32/2549.
(2) Dividend per share include the followings :
- Interim dividend of Baht 3.00 per share and Baht 1.00 per share were fully paid in the third quarter and fourth
quarter of 2008 respectively.
- Proposed final dividend of Baht 2.50 per share for shareholders’ approval on April 29, 2009 bringing total
dividend for 2008 to Baht 6.50 per share.
FINANCIAL HIGHLIGHTSAs at 31 December
Siam Makro Public Company Limited
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(2)
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Unit : Baht Million Change (%)
2008 2007 2006 2008/2007 2007/2006
Total assets 20,686 20,760 19,283 (0.4) 7.7
Total liabilities 12,158 12,466 10,540 (2.5) 18.3
Share capital 2,400 2,400 2,400 0.0 0.0
Shareholders’ equity 8,528 8,294 8,742 2.8 (5.1)
Sales 72,139 62,099 55,531 16.2 11.8
Total revenues 74,310 63,934 57,407 16.2 11.4
Gross profit 4,853 4,183 3,322 16.0 25.9
Net profit for the year 1,674 1,292 1,223 29.6 5.6
Earnings per share for the year (Baht) 6.98 5.38 5.10 29.7 5.6
Par value per share (Baht) 10.00 10.00 10.00 0.0 0.0
Book value per share (Baht) 35.53 34.56 36.43 2.8 (5.1)
Dividend per share (Baht) 6.50 5.25 5.50 23.8 (4.5)
Net profit margin for the year (%) 2.3 2.0 2.1
Return on equity (%) 19.9 15.2 13.9
Return on total assets (%) 8.1 6.5 6.4
Dividend pay out ratio (%) 93.2 97.6 107.9
Remark :
(1) Dividend per share include the followings :
- Interim dividend of Baht 3.00 per share and Baht 1.00 per share were fully paid in the third quarter and fourth
quarter of 2008 respectively.
- Proposed final dividend of Baht 2.50 per share for shareholders’ approval on April 29, 2009 bringing total
dividend for 2008 to Baht 6.50 per share.
FINANCIAL HIGHLIGHTSAs at 31 December
Siam Makro Public Company Limited and its subsidiaries
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2008 was a year of “Development” for Siam Makro following a record breaking expansion by the successful
opening of 12 stores in 2007, 10 of which were inaugurated in the last 4 months of the year. This provided Siam
Makro with stronger market position, wider market coverage with better access to the customers and significant
increased purchasing power. Expectation for 2008 was high and the year commenced with a high note as the
Company continued to generate expected result till the end of September 2008 despite increasing competition
and various factors which negatively impacted Thai retail industry i.e. increased fuel price, fluctuation in
commodity prices, Melamine contamination scandal and low consumer confidence. This was due to our strong
business model, clear market positioning, strong teamwork and customer focus. Nevertheless, 4th quarter had
seen a poorer result following the onset of the US Financial Crisis, the unfavourable political environment and
Alcohol Beverage Control Act, which caused poor spending sentiment, decline in number of tourists, customers
become more value conscious in their spending and ultimately less spending power in the economy. Although the
result during the last quarter of the year did not meet expectation, the Company managed to increase its total
sales from 2007 by 16.2% and same stores sales by 4.4%.
Majority of the double digits sales growth was attributable to the 12 new stores opened in 2007. 10 of these
stores are traditional Makro store format which focus on retailer and HoReCa customers while the other 2 are
new Eco store format which specialise in servicing HoReCa customers and they are situated in popular tourist
destinations with high concentration of hospitality industry operators. The Eco stores have proven to be another
successful format as evidence in their outstanding first year performance. The whole teams spent significant
amount of time and effort in 2008 on development of the new stores via close monitoring of their performance,
constant stores and customers visits and fine tuning of assortments and pricing. The Company will continue to
put in effort to ensure their continual development in the future.
Siam Makro foresees future growth potential in the fresh and frozen food business following the implementation
of Fresh Food Concept in 2003, which grew by 4 times since. In compliance with such expectation of future
development, Siam Makro inaugurated a new Distribution Centre (“DC”) for fresh and frozen product in Wang
Noi, Phra Nakhon Siayutthaya Province. This new facility has an increased capacity of 100% and will provide a
long-term solution to support the fresh and frozen business growth in the future. It is constructed in compliance
with the Food Safety Standard and has implemented Good Laboratory Practice (“GLP”). Moreover, a new and
bigger DC for Dry Food and Non Food with automated sortation system is under construction next to the DC for
fresh and frozen food and it is expected to be operational in the middle of 2009.
In addition to the above development, the Company also completed remodeling of 4 small stores to re-layout, fine
tune assortment and install air-condition system to improve service and provide convenience to its customers.
Moreover, as part of the Bakery Project, 7 existing stores were equipped with bakery facility in 2008 with an aim
to improve the quality of its bakery product and provide customers with fresh and more diverse assortment to
fulfill their requirement in HoReCa business.
MESSAGES FROM THE BOARD OF DIRECTORS
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MESSAGES FROM THE BOARD OF DIRECTORS
In May 2008, the Company sold its entire investment in a 99.9% owned subsidiary, Makro Office Centre
Company Limited (“MOC”), a category killer specialises in supplying office supplies, office automation, office
furniture and business services, to the Central Retail Corporation Group. The rationale for this transaction was for
the management to focus their attention on the food side of the business. And in July 2008, in order to manage its
idle assets, Siam Makro sold unutilised land next to Bangbon store. Profit from these 2 transactions was fully
realised in 2008 financial year.
Customer Development Programs is one of the main pillars in Siam Makro’s business model and we continued to
emphasis on this activity. In 2007, the management anticipated inevitable cannibalisation of new stores on the
existing stores as the new stores are established in closer proximity to the existing ones. The management
therefore put in place a proper customer development plan with objectives to maintain and improve existing
stores’ performance and minimise cannibalisation impact and these programs have proven to be successful
in 2008.
Siam Makro has always been committed to our responsibility to the societies where we operate. The Company
and its employees participated in various social activities, continue to role out the Makro Retailer Alliance (“MRA”)
Project to help small food retailer and ensure that food safety standards are maintained. The Company also
continues to increase its support to the “Royal Project” under the royal patronage of both H.M. the King and H.M.
the Queen as it distributed the produce from these projects in its stores countrywide. These products include
fruits and vegetable from Doi Kham Royal Project, shrimp from TAPASA FOUNDATION and local vegetable
assortment from various agricultural projects under the royal patronage of H.M. the Queen.
In addition to the above, the Company provided assistance to the relieve efforts in the disaster hit areas. In 2008,
a number of provinces were badly hit with heavy flood and the people living in those areas were forced to
evacuate from their homes and basic necessities were in short supply. Siam Makro supported the
RAJAPRAJANUGROH FOUNDATION Under Royal Patronage to supply basic food products with special prices
and organised delivery of these relieve supplies to the affected areas countrywide.
With Company’s vision to enhance the competitiveness of the small food retailers amidst the highly competitive
market, Siam Makro launched the MRA Project in 2007 with an objective to provide assistance to small food
retailers to increase their competitiveness by providing them with business management knowledge and skills. In
2008, the project moved into 2nd and 3rd phase of its implementation where a Retailer Expo was organised in
MRA Centre at Makro Lardprao store to provide advice to customers. Several MRA Seminars & Training courses
were organised in corporation with Suan Dusit Rajabhat University in Bangkok and several provinces participated
by thousands of retailers and the feedback of MRA Project continue to be positive.
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The 3rd Makro HoReCa Extravaganza, an event to create awareness for suppliers, customers and general
public of Makro's commitment to professional customers and to reinstate its focus on HoReCa sector, was held in
March 2008 at Impact Exhibition Centre Muang Thong Thani and the event attracted approximately 60,000
visitors. A full range of activities were arranged throughout the 3 days including cooking demonstrations, food
contests, guest speaker sessions, etc. to update participants with new products, new ideas and to provide
consultations. The event was a success as indicated by positive survey result and Siam Makro will continue to
hold this event in the future.
For Siam Food Services (“SFS”), a wholly own subsidiary, 2008 had been a year of development and
adjustments. SFS continued to perform well throughout the first half of 2008 but the result started to slide in the
second half as hospitality and tourism industry were negatively affected by the global financial crisis and the
unfavourable political environment. Nevertheless, SFS remains a leading player in the premium food products
market and the management believes in SFS strength to sail through this difficult time.
During 2008, the Company set up a Nomination and Remuneration Committee in order to promote transparency
and to comply with the corporate good governance. This committee comprises 3 members from the Board of
Directors; 2 independent directors and 1 executive director.
Despite the gloomy economic outlook, 2009 is designated as the platform to “Go and Grow” where we will place
continual emphasis on growth and people. Staffs will be given opportunity to develop via various initiatives to
realise their potential in order to support the growing requirement. It is also the Company's vision to continue
exploring for expansion opportunity based on defined investment criteria both in its core business and other
synergistic business which can fit into its overall strategy. This is to ensure that the Company will continue to be
the leading Cash and Carry in Thailand and to be well equipped to excel in the evolving market environment.
We would like to thank our business partners including our valued customers and suppliers, shareholders, Board
of Directors, employees and management for their continued support in making 2008 another successful year
for Siam Makro.
Mr. Arsa Sarasin Mrs. Suchada Ithijarukul
Chairman President
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Siam Makro Public Company Limited’s Audit Committee comprises of three independent Directors who have
the required qualifications and are independent in compliance with the SET’s requirements. The members of the
Audit Committee are Mr. Athaporn Khaimarn, Chairman, Mr. Chavalit Uttasart and Mr. Thira Wipuchanin.
During the year 2008, the Audit Committee had totaling 4 meetings. A summary of the attendance of each
member of the Audit Committee was as follows:
Name Number of Attendance
1. Mr. Athaporn Khaimarn 4
2. Mr. Chavalit Uttasart 3
3. Mr. Thira Wipuchanin 4
The management and external auditors were invited to attend each meeting to discuss various issues of concerns.
The major matters discussed are as follows:
Preparation of Financial Statements
1. Review the quarterly and annual financial statements and consolidated financial statements of the Company
and its subsidiaries for the year 2008 with executives and auditors to ensure that financial statements of
both the Company and its subsidiaries were in accordance with generally accepted accounting
principles and that information was adequately and completely disclosed in a reliable manner.
2. Review the disclosure of related party transactions between the Company and its subsidiaries to ensure
that the Company complied with business criteria required by the Stock Exchange of Thailand.
Internal Control System
3. Review the Company’s internal control systems and internal audit system to ensure that they are suitable
and efficient, and to determine an independent of the internal audit unit.
4. Review internal audit plan and audit findings for the year 2008 reported by Internal Audit Department.
5. Jointly with the external auditors, the internal auditor and the Company's management, review material
issues relating to internal controls and operations procedures of the Company.
Related Party Transactions
6. Review related party transactions that may cause a conflict of interest to the Company and found that
they were real and carried out during a normal course of business and the Company carried them out
according to a good corporate governance policy.
Selection of the Company’s external auditors
7. Consider, select and nominate independent persons to be the Group external auditors and consider
proposed audit fees together with the Company’s Board of Directors, as well as to attend a non-
management meeting with the external auditors once a year.
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Law and Regulations compliance
8. Review the Company’s compliance according to laws governing securities and exchange, regulations of
the Stock Exchange of Thailand and other legislations relating to its business and found that they were
fully complied.
The Audit Committee, having reviewed the operations, is of the opinion that the Company diligently pursued
the good corporate governance policy, resulting in an adequate internal control system with no significant
weakness. Related party transactions which may lead to conflict of interest were actual transactions found during
a normal course of business carried out for the Company’s maximum benefit. No unusual item with material
essence was found. The Company also fully complied with all the rules and regulations. For the financial
statements during the accounting period that ended 31 December 2008 were properly done. Information was
adequately disclosed and in line with the accounting standards and there was no incident that depicted items with
financial impacts.
(Mr. Athaporn Khaimarn)
Chairman of the Audit Committee
Siam Makro Public Company Limited
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Economics Environment
The global economy has taken a downturn following the onset of the US Financial Crisis in mid 2008 causing a
slump in a range of industries both big and small worldwide. Not only financial institutions that faced difficulties as
the quality of their assets deteriorated and requiring rescue packages from their government or capital injection
from shareholders but other major industries such as automobile, manufacturing, retail, etc. are also
experiencing challenges as the level of business, profitability and liquidity declined and this led to cut back in
their investment, expenditures and employment. All these led to a slowdown in economic activities and a
reduction in international trade flow.
Thailand's economy grew around 5-6% in the first half of 2008 driven by the growth in export sector. However,
the sharp increase in fuel price, coupled with fluctuation in commodity prices i.e. rice, sugar and cooking oil
caused inflationary pressure on the economy. Furthermore, the lingering political unrest led to low consumer
confidence which had adverse effect on retail sector. The second half of 2008 was adversely affected the decline
in global economy which caused a reduction in export activities, domestic spending and investment. This was
made worse by the local political turmoil which led to a number of demonstrations and closure of international
airports which not only further hurt the consumer confidence but also the confidence of international community.
The rapid reduction in export, domestic demand for goods and service and the decelerating private investment
caused the Thai economy to grow at 2.6% in 2008, a lower growth rate as compared to 4.9% in 2007. Inflation for
the year also closed at 5.5% mainly from the high fuel price and fluctuation in commodity prices in the first half.
The outlook for 2009 remains uncertain and further slowdown in the economy is expected as private
consumption and investment remain weak and global economy continues to display sign of deterioration causing
further decline in external demand for Thai exports. Nevertheless, as the new government assumed office in the
beginning of 2009, there is a hope that it will be a more stable government and this helped to lift confidence both
domestically and internationally. This coupled with the various fiscal stimulus packages including government
planned investment in capital projects and increased government spending should somewhat counter the
negative effect of weakening economy.
MANAGEMENT DISCUSSION AND ANALYSIS
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Revenue
Consolidated sales increased by almost 16.2% to Baht 72,139 million, up from Baht 62,099 million in 2007,
despite the disposal of Makro Office Centre (“MOC”) in June 2008. The continuing growth in sales reflects the
incremental contribution from new stores opened in 2007, the successful implementation of Customer
Development Programs and the strong growth in fresh food department. Sales from Dry Food department also
grew strongly but sales from Non Food department declined slightly behind last year as a result of disposal of
MOC. On same store basis, Makro’s sales grew in excess of 4.4% with a particularly strong performance in fresh
food department.
Total consolidated revenue was Baht 74,310 million, increased from Baht 63,934 million in 2007, an increase of
16.2%. This was a result of the strict discipline in implementing the business strategy and effective follow up of
the targeted result.
Gross Profit
The absolute amount of gross profit margin rose by 16% from 2007 which is inline with sales growth. The
percentage of gross profit margin to total sales remain at 6.7% as compared to last year, despite a mounting
competitive pressure from indirect competitors through their rapid expansion and external economic factors
which has margin erosion effect. This was achieved by increasing sales participation in the higher margin
product and improvement in shrinkage management thanks to the improve facilities in the new Fresh and
Frozen Distribution Centre.
MANAGEMENT DISCUSSION AND ANALYSIS
Total Consolidated Revenues (Baht Million) Net Profit for the Year (Baht Million)
2008
57,407
63,934
74,310
20072006 2008
1,6741,292
1,223
20072006
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Consolidated Selling and Administrative Expenses
(Baht Million)
No. of Employees of the Company
and its Subsidiaries
2008
3,486
4,180
4,547
20072006 2008
3,541
5,1744,920
20072006
Selling and Administrative Expenses
Overall selling and administrative expenses increased by Baht 367 million or 8.8% to Baht 4,547 million in 2008,
up from Baht 4,180 million in 2007. This represented 6.1% of total revenue compared to 6.5% in 2007. The
increase was mainly due to the full year operating expense of 12 new stores as compared to only pre-opening
expense and partial expense of these new stores in 2007. The increase in selling and administrative expenses
was less than the increase in sales as new stores continue to increase their sales contribution as well as tight
expense control company wide. We will continue to explore productivity and efficiency improvement to optimise
expenditure.
Net Income
Consolidated income before interest expenses and taxation was Baht 2,477 million, up Baht 639 million from Baht
1,838 million in 2007 representing an increase of almost 34.8%. This income includes 2 extraordinary items which
were one time gain of Baht 278 million from the sales of MOC and sales of excess land in Bangbon. Income after
taxation was Baht 1,674 million, up some Baht 382 million or 29.6% from Baht 1,292 million in 2007. If exclude
the extraordinary items (after tax) of Baht 187 million, the net income after taxation will be Baht 1,487 million,
which rose by 15.1% as compared to 2007.
Earnings per Share
Earnings per share was Baht 6.98 per share for 2008 compared to Baht 5.38 per share in 2007. Excluding the
extraordinary items, 2008 earning per share was Baht 6.20 thus reflecting the continuing improvement in net
operational income for the year.
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Financial Status
The Company’s financial status as of 31 December 2008 reflected a strong trading position, significant increase in
net operating cash flow and cash generated from disposal of non-core assets. Consolidated total assets remained
at similar level as that of 2007 at Baht 20,686 million. Nevertheless, the Company invested Baht 1,126 million in
several remodeling projects, store improvement and acquired 2 sites for future expansion.
Cash position in 2008 improved from 2007 by Baht 361 million despite the fact that the Company paid a total
dividend during the year of Baht 1,440 million representing 2007 final dividend and 2008 interim dividend. The
increase was during primarily to the disposal of non-core assets of Baht 608 million, 1 year term loan in
September of Baht 1,000 million for capital investment and liquidity reserve and the profit generated from the
Company's normal operation.
Current Liabilities decreased in 2008 by Baht 323 million despite the increase in short-term loans from banks of
Baht 650 million used for both capital expenditure and to maintain as liquidity reserve. Other factors contributing
to the decrease include the reduction in Trade Account Payable of Baht 536 million due to more prudent inventory
management in 4th quarter, reduction in non trade account payable of Baht 323 million and lower accrued
expense of Baht 108 million because there was no expansion in 2008.
The Company is not fully financed by equity after the borrowing for the expansion of 12 new stores in 2007.
At year end, the short-term loan increased from Baht 565 million in 2007 to Baht 1,215 million in 2008 as a result
of additional loan during 2008 for capital investment and liquidity reserve. There have been no increase in share
capital during the year and the share capital remains unchanged at Baht 2,400 million, consisting of 240 million
shares with a par value of Baht 10 each fully paid up.
The Company’s debt to equity ratio (D/E ratio) reduced from 1.5 in 2007 to 1.4 in 2008. This reflects a stronger
equity position from strong operating activities and less current liability.
The Group has adequate cash and credit line facility funding with which to support future expansion and business
acquisitions should appropriate opportunities be identified.
During the year, the Federation of Accounting Professions has announced several new standards and
amendments to the Thai Accounting Standard. All but one standard had financial impact on our Statement of
Income and it is the TAS 43, which is about “Business Combination” and it requires no amortisation of goodwill
from business combination and review the impairment of goodwill annually. This standard has a positive impact
as the goodwill amortisation of Baht 10 million is no longer required in 2008.
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Total shareholders’ equity have increased by Baht 234 million from 2007 due mainly to higher earning after tax
during the year in excess of the dividend payment of Baht 1,440 million during 2008.
Dividend
On 19 February 2009, The Board of Directors of the Company unanimously resolved to propose a final dividend
in respect of 2008 of Baht 2.50 per share amounting to Baht 600 million to the Annual General Shareholders’
Meeting for approval and to be paid in May 2009.
A 2008 interim dividend from current net profit after tax for the nine-month period ended 30 September 2008 of
Baht 1.00 per share amounting to a total of Baht 240 million was approved at the Board of Directors’ meeting on 7
November 2008 and fully paid in the fourth quarter of 2008.
A 2008 interim dividend from current net profit after tax and unappropriated retained earnings as at 30 June 2008
of Baht 3.00 per share amounting to a total of Baht 720 million was approved at the Board of Directors' meeting
on 7 August 2008 and was fully paid in the third quarter of 2008.
A final dividend in respect of 2007 of Baht 2.00 per share amounting to Baht 480 million was approved at the
Annual General Shareholders' Meeting on 29 April 2008 and was fully paid in the second quarter of 2008.
Share Price
The closing share price for the Company at 31 December 2008 was Baht 67.50. The Company was capitalised at
Baht 16,200 million, down Baht 7,560 million from Baht 23,760 million at the end of 2007, representing a 31.8%
reduction. Despite such decline in share price, Siam Makro’s shares still outperformed the stock market as the
Stock Exchange of Thailand Index performed significantly lower in 2008 decreasing by 47.6% from 858.10 in
2007 to 449.96 in 2008.
Audit Committee
In accordance with the regulations of the Stock Exchange of Thailand the Company has formed an audit
committee comprising three independent directors. The report of the audit committee is set out on page 7.
Corporate Governance
The Company is committed to the implementation of Good Corporate Governance practice, and a report on our
application of the Principles of Good Corporate Governance is set out on page 58.
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A Year of ‘Development’
Focus of 2008 was “Development” of the Makro business following the aggressive expansion of the 12 new
stores in late 2007. To attain this, the Company placed emphasis on the Cash and Carry format with increasing
focus on the Customer Development Programs to ensure sustainable growth for existing stores and minimise
cannibalisation impact from new stores. These programs include a proactive approach to initiate constant
communication with the core customer groups to learn and address their evolving requirements in order to
develop them and gain their loyalty.
To further support the customer focus strategy, Makro continues to improve our assortment and facilities to lift the
level of customer service. 29 remodeling activities in the stores under 5 projects were completed during 2008 to
improve the layout and display, facilitate expanded assortment, improve customers flow and enhance customers’
shopping experience.
Siam Makro continues to optimise the business and look for new opportunities whilst in parallel working as a
team for better results keeping the hierarchy and bureaucracy to a minimum.
Customer Development Programs
Knowing our customers and understanding their needs are essential elements to ensure our success in the
market place. The Customer Development Programs are therefore one of the main pillars of the Makro business
model to acquire, develop and retain our valued customers. To enhance the success of the new stores, it is also
essential for us to differentiate ourselves from both the direct and indirect competitors by communicating with our
customers our wholesale concept, the strength of our food programs and our commitment to them.
Capitalising on our customer database, Makro was able to work effectively with selected customers in a number
of existing stores via the Cannibalisation Program and Growth Campaign and these programs demonstrated
success by giving incremental sales from 2007 from this group of customers by 52% and 157% respectively.
Siam Makro recognises that the needs of customers located in different area of the country are diverse and with
the valuable input from the customers, we are able to bring the right assortment at the right price to our
customers regardless of their geographical location therefore becoming a “One-Stop for Food Service”, a crucial
advantage in time of high transportation costs.
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Assortment and Pricing
Assortment is key to our ability to attract and retain our core customer base. Our customers must be satisfied that
our stores carry the required products at the right price. Assortment represents not only the product range but
also the choice within that range i.e. packaging and sizing, own brand availability and the actual choice of brands
available. Our target customer groups have special and differing buying needs - small retail shops may wish to
sell certain products in small package sizes whilst our HoReCa customers seek larger pack sizes in food
categories. Through close observation of customer buying patterns and constant communication with them, we
are responsive to the different demands of our core customer base. As we expand more into new areas, we can
adapt our product offering to the specific needs of the customers in each location.
Price competitiveness is pivotal to our success and to our ability to attract and stay supplier of choice for our core
customer base. The ability to price competitively is achieved through a variety of factors, including price surveys,
improved internal cost management and our ability to negotiate for competitive pricing from our suppliers.
The Initiatives of 2008
In the ever-changing competitive landscape, continual improvement to business processes to achieve higher level
of efficiency and fine tuning of business model in order to stay relevant to the market are among the most
essential factors to ensure that Makro remains a leading Cash and Carry operator in Thailand. To capitalise on
the strength of its food programs and to extend the success story of the bakery department, Makro further
invested in 7 stores to equip them with bakery facility as well as expanded the assortment. The Company also
developed the spice department into a destination product for HoReCa customers in order to gain customer
loyalty and for this, Makro expanded spice assortment with an aim to have the most complete assortment as well
as enlarged spice room area in additional 13 stores. In order to improve service to customers, 4 stores were
remodeled to have new layout, added assortment and air-conditioned installed. Furthermore, the Non Food area
in 4 stores were remodeled to improve customer flow and optimise assortment layout. In addition, the health and
wellness zone in 1 store was remodeled as a pilot store to increase the area in order to accommodate wider
assortment and to improve customer access.
With the aim to continually meeting our core customers’ needs and improving customer service, Siam Makro
introduced the concept of External Sales Force and Internal Sales Force in 2008. The External Sales Force
encompasses of the Customer Development Officers, a new role introduced in 2007, to visit our customers to
communicate with them on personal level to determine their requirements and obtain feedbacks in order for the
Company to devise effective action plans. The Internal Sales Force assumes the role of customers care while
they are shopping within the stores by providing assistance where necessary. At the same time, services provided
in stores, assortment, pricings, displays are constantly reviewed and these together are to improve the customers
shopping experience.
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The Company maintains a low cost structure by actively searching for additional cost optimisation and
improvement in operational efficiency. Initiatives from previous years continued to be implemented i.e. effective
margin control, aging stocks and stock financing. New initiatives include benchmarking of best practices
especially in the new stores to achieve more efficient energy consumption, improve product handling to reduce
shrinkage and to improve stock turnover. “Gap check” software was implemented to improve stock replenishment
capability. In addition, “Fresh Suchama”, an automated ordering software for fresh and frozen product, was
implemented and this will facilitate improved efficiency and accuracy in orders consolidation. Moreover, 2nd phase
of E-Document system, which handles all financial and management report, is in the final stage of testing and this
will allow more efficient data storage, handling and retrieval as well as reducing paper consumption.
Siam Makro acknowledges the increasing importance of food safety issues especially after the Melamine scandal
in 2008 and we are committed to continually improve the food safety standard from the point of receiving right
through to the point of sales. To achieve this, we implemented Good Laboratory Practice (“GLP”) at both Fresh
and Frozen Distribution Centre, to test product on sampling basis by qualified personnel to ensure they are free
from harmful substances, and in all stores, by providing food safety trainings to the staffs. In addition, we also
hired 3rd party expert to provide training and conduct audit of our facilities to prepare us for higher level standard
and that the practice is sustainable.
Makro HoReCa Extravaganza
Makro hosted successful 3rd Makro HoReCa Extravaganza in March 2008. This unique three-days event was
again held at the Impact Exhibition Centre in Muang Thong Thani over an area of 10,000 square metres. Over
this period, approximately 60,000 visitors attended the event with more than 260 suppliers showcasing their
product. The aim of this activity is to promote the Makro’s positioning as professional and “One-Stop for Food
Service” in particular for the HoReCa businesses. The event featured a full range of activities such as talk shows
by industry experts, cooking demonstrations, culinary contests, seminars on various food topics and consultation
booth for HoReCa businesses. This event gave the visitors a unique opportunity to meet with the specialised
HoReCa assortment suppliers to update on the product knowledge, new ideas and future initiatives.
Bakery
The Bakery project was initiated in 2006 in Makro Lardprao to add to its successful food programs, as a
differentiation feature from the competitors as well as addressing the need of HoReCa customers. Since then, the
performance of this department has been promising as evident by its revenue growth from last year in excess of 40%.
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7 stores has been remodeled in 2008 and Makro now has a total of 23 stores that are remodeled with new bakery
facilities and this can greatly improve the assortment offering as well as quality o f the products as they are
produced on-site. There has been a continual development and standardisation of recipes and increasing product
range to cover the requirement of HoReCa and service customers i.e. cookies, product in tray, snack box,
seasonal range, etc. and Makro now has over 100 active recipes for our customers to choose from.
Moving Forward with Logistics
Logistics is a fundamental part of Makro’s business strategy to boost operational efficiency and support business
growth. Stronger supply chain management adds value through the better inventory management at stores
therefore reflecting a more constant supply, reduces out of stock and shrinkage and thus increasing sales.
There has been a significant development in 2008 as the new Fresh and Frozen Distribution Centre (“DC”) in
Wang Noi, Phra Nakhon Siayutthaya was inaugurated. This facility has an increased handling capacity of 100%
and will be able to support the expansion of Fresh and Frozen business in the future. One of the main features of
this DC is that it covers multi temperature ranges and this helps to ensure that assortment are stored and
processed at optimal temperatures. This, coupled with the GLP standard it observes, the new DC will facilitate
increased delivery frequency thereby improve stock availability at stores as well as maintaining high quality, food
safety and freshness of the product. Additionally, a new Dry Food and Non Food DC with automated sortation
system is under construction next to the new Fresh and Frozen DC. This is to cope with the increased volume
and improve both productivity and accuracy.
Success comes through our People
Siam Makro recognises that people is an important aspect to the continuing success and future of the Company.
It is crucial for the staffs to be adequately trained to perform their role effectively. Additionally, actions were taken
to identify training needs by introducing individual training plans for “high” and “young” potential. The extensive
Customer Development Training Program continued in 2008 following the success stories of the previous years.
Team Building activities were conducted in new stores with emphasis on the integration of new staffs experience
and existing staffs to optimise performance.
As a meritocratic company, Siam Makro promotes performance based reward on both individual and team level.
In 2008, a new performance appraisal methodology was implemented and it does not only improve individual
performance assessment but also link to individual career development.
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Background
There have been constant changes to the retail market condition over the decade and one of the notable
changes is that the presence of small food retailers, which is part of the Thai culture, has been reducing over the
years. Some of the reasons behind such decline were their limited business knowledge i.e. management,
marketing and finance, outdated business model, change in consumers' behaviour, more intense competition and
lack of interest from new generations.
The Vision
Makro is aware of the change and as part of its Corporate Social Responsibility initiative, Makro realises the
importance of providing assistance and support to the small food retailers to enhance their ability to compete
effectively and to form a strong retailer network which are key success factors for them to not only survive but
also grow in the highly competitive market.
The Objectives
With such vision, Siam Makro launched the MRA Project in early 2007 with objectives to continuously provide
small food retailers with retail management knowledge and recommend commercial tools required to increase
their competitive edge throughout their business life-cycle and to help form a strong independent retailers
network.
Activities and achievements
In 2007, the team initiated Phase 1 of the project by arranging several activities to pilot the program including
organised a Grocery Shop Design competition and a scholarship was given to the winner, offered certified retail
training program to small business owners and their successors using materials developed in cooperation with
Chulalongkorn University and wrote weekly articles regarding “running a successful small retailer business” and
published in the local newspaper (Kom Chad Luek) in line with the training program.
To build on the success of the 2007 activities, the Company commenced Phase 2 and 3 of the project in 2008. In
February, a Retailer Expo was successfully organised at Makro Lardprao with activities including live exhibition,
advisory service on shelf display, stock management and software, consultation counter from Ministry of
Commerce, Kbank and SME Bank, arranged 9 seminars and launched the MRA Centre. The event was joined by
55 exhibitors and attracted over 10,000 visitors.
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From March to June, the MRA team organised continuous activities such as MRA training programs, seminars,
advisory service and visited participants’ shops to provide advice and create awareness. The training program
was organised weekly at the MRA Centre using material developed in cooperation with Suan Dusit Rajabhat
University covering 12 retail related topics and some of them are; How to become top retailer, Product
management, Stock management, Shop design, Shop layout, Selling strategy for small retailers, Finance &
accounting, etc. These topics are independent from one another thus giving flexibility to participants to join only in
sessions they are interested. The training program attracted over 600 participants and the feedbacks have
been positive.
With the success of the MRA training programs and in order to address the demand for the program from
upcountry, the MRA team conducted 8 regional training road-shows during May to August which attracted over
2,000 participants. The main focus in these road-show was to motivate the participants to change the way they do
their business to cope with new business environment. In addition, the MRA team participated in 8 new stores
anniversary events during October and November with activities including Feng Shui seminars for retail shop and
advisory booth to provide information on how to manage retail shop effectively.
The MRA Project has been recognised not only by the customers but also by the government agencies. The
Department of Business Development, Ministry of Commerce and Office of Small and Medium Enterprise
Promotion, Ministry of Industry share common objective as Makro in wanting to help develop small business
operators and they have therefore supported the MRA Project by participating in the anniversary events and set
up booths to provide business advice. The cooperation with government agencies is an important facet to the
MRA Project development and Makro will continue to work with these agencies to accelerate the project
implementation.
The MRA Centre
In order to create visibility of the project, the MRA Centre has been permanently set up and was launched during
Retailer Expo in February 2008 at Makro Lardprao to be a place where small food retailers or small entrepreneurs
can seek advice on retail business issues. The centre is opened during business hours and it welcomes all
interested parties to provide them with advices or information. It is equipped with an advisory area, a seminar
room and a model of a typical retail shop to provide participants with sample layout, assortment, merchandising
and inventory storage.
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Plans forward
In 2009, the MRA team will continue to push forward with MRA network development nationwide. Among a whole
range of planned activities will be the MRA Training Program which will be conducted with a focus on 7 key retail
management topics which are developed based on the material used in the previous training programs and MRA
team's advisory experience since 2007. In addition, Siam Makro intended to roll-out the MRA advisory service
nationwide to widen the coverage and expand the network. This will be achieved by training the Customer
Development Managers and Officers at the stores with retail shop management knowledge so that they can
provide better advice to their customers and small entrepreneurs who are interested. Moreover, based on the
success of the previous road-show, the MRA team will organise MRA activity in selected Makro stores nationwide.
The team will also organise the National Retailer Day, which is a major MRA event of this project by this year.
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SFS is a leading provider of premium food products, value-added services and logistic services to the hospitality
and food service industry nation-wide. It specialises in supplying highly specific frozen and chilled meat, seafood,
poultry, potato, diary, seasonings, etc. SFS operates from 2 locations, one in Bangkok and the other in Samui, a
new branch opened in 2007 to provide daily service to its Samui customers. The principal customers are from
HoReCa and retail sectors and these include major independent and multinational restaurants, hotels, contract
food service operations and hypermarkets.
There has been a continual development in the Thai food market fueled by both external and internal factors.
Thailand tourism and hospitality industry are world renowned leading to a well-developed and competitive food
service industry as marked by the presence of an array of HoReCa operators ranging from international brands to
small independent establishments serving multitude of delicacies to overseas visitors. The economic growth in
the past decade has seen a growing middle class which higher disposable income and this population group has
an affinity for trying new food experiences as well.
SFS is ideally positioned to take leadership in its core markets with its market understanding, wide product
offering and exceptional product knowledge. By optimising the temperature controlled facilities, SFS is able to
deliver very high quality product i.e. imported Meat, Seafood, French Fries, Dairy, etc to its clients countrywide. In
addition, by leveraging on the strength of Siam Makro, SFS is able to further diversify towards dry groceries
range and gain access to new customer groups. These, along with its Customer Relationship Management
program, will allow SFS to capture market growth opportunities.
Despite the declining market conditions and poor spending sentiment in 2008, SFS continued with its
development programs to enhance its competitive edge and to maintain its market position. The office was
renovated and new facilities were built i.e. laboratory, sample room and test kitchen, to radiate a professional
image and to support future growth. Moreover, the marketing aspect of SFS has been improved including
updated company website, completed new brochure and arranged various customer events for product
demonstration. The customer based was expanded to include Asian privately-owned and chain restaurants and
this lead to a more diversified portfolio. On the assortment front, the range in SFS's own brand, “HoReCa”, has
been expanded to facilitate customer loyalty and cater for the value conscious customers, especially in the
current market condition. SFS also expanded brand portfolio it represents namely Haco for food ingredients and
flavourings, Farm Frites and McCain for French fries, “Pierre Quercaque”, “Edouard Artzner” and “Ponthier and
Sylna” for gourmet products, Australian meat from Mulwarra and AMH, etc. The management team has also been
strengthen as key positions have been fulfilled. In addition, training programs were organised for staffs in both
common and functional areas. Specific intensive training program, among others, is the product knowledge
training for the sales team to improve their knowledge on product range, quality, application and etc. and this is to
differentiate SFS from competitors and to break away from the price base competition.
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2008 has been a year of development for SFS and 2008 commenced with high expectation. Performance during
first half has been positive with sales growth of 19% following various initiatives. However, performance of SFS
declined during second half of the year. This was brought about by poor market sentiment during high season
caused by a decline in tourism and hospitality industry which was a result of the political turmoil and the US
Financial Crisis, which had a ripple effect throughout the globe. Despite the problems, SFS managed to finish
2008 with a slight sales increase of 0.5% to Baht 848 million before elimination of sales to Siam Makro and a
sales increase of 1.1% to Bath 739 million after elimination. The underlying profitability also increased slightly by
7.9% to Baht 10.9 million. The management is confident regarding the forward strengths of SFS despite the
gloomy economic outlook and to maintain organic growth through its commitment to continue improving its
capabilities, optimising costs and exploring for new opportunities.
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Retail Market in Thailand
There are two types of retail business operating in Thailand. One is the unique ‘Mom and Pop’ grocery store,
traditionally located in every small community throughout the country. The other type is the modern trade store,
which includes not only department stores, but also other type of retail outlets. The face of the Thai retail market
has been changing for a number of years with small traditional independent retailers gradually being replaced
with modern and often foreign-owned large retail operation chains. New shopping experiences and new formats
are also being introduced into the market and they are forcing the key players to constantly reassess their
approaches in order stay relevant in the ever-changing environment.
Key Players within the Modern Trade Wholesales and Retail Market
Discount Sector
In the discount (superstore/hypermarket) sector there are 3 major players, Tesco Lotus, Big C and Carrefour. This
highly competitive sector does not include the cash and carry sector, as it has different operating characteristics to
that of the discount sector. Major players continued to diversify their store formats as opportunities for development
of large hypermarket store has been impacted by the zoning laws. Tesco Lotus, the biggest player, now operates
through hypermarket, Express stores, Value stores, Talad Lotus and @Oasis, a new format introduced in 2008.
During the year, Tesco Lotus opened several branches under all formats bringing their total numbers to 79
hypermarket, 30 Value stores, 53 Talad Lotus, approximate 400 Express stores and 1 @Oasis store. Big C is the
second participant within the discount sector operating through the hypermarket and mini Big C format. During
2008, Big C opened 12 new hypermarket stores and this amount to 66 hypermarket stores and 10 mini Big C stores
at year end. The third major player is Carrefour which opened 4 stores, bringing the total to 30 stores. As the current
zoning regulations continue to impact opportunities for new development, particularly of the larger size stores, as
well as the impending new Wholesales or Retail Operating Business Act, which will place even more restrictions on
expansion, and despite the slowing down economy, it is anticipated that operators within this sector will continue in
2009 to explore expansion opportunities through the diversification of their store format and new store location.
Cash and Carry Sector
The cash and carry sector does not focus on the end user, but on commercial business users, for whom buying is
an integral business function. The cash and carry operators, who compete in the same market segment as the
traditional wholesalers, experienced slower growth than the hypermarkets, and compete for a different customer
segment. Cash and carry operators do not necessarily target the same locations as the hypermarkets as their
core customer base is not the same. Furthermore, core customers to the cash and carry operators include the
small retailers, the 'Mom and Pop' shops that actually represent competition to the discount hypermarket.
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Supermarket Sector
The competitive supermarket sector is mainly concentrated in Bangkok where higher levels of consumer income
and sophisticated customer base support this retail format. The major players are Tops, Foodland and Villa
Market. The Tops Supermarket has a strong brand recognition in the eyes of the Thai consumer and operated
109 branches at year end 2008. Foodland is Thailand’s oldest supermarket chain and currently has 11 outlets.
Villa Market provides all household essentials as well as local and imported groceries, fresh fruits, vegetables,
meat, poultry, fish, liquor, electrical, school and office supplies, local and imported magazines and a mini
pharmacy. Targeting the premium market segment, most of its shops are located in affluent areas.
Convenience Sector
The convenience store sector is dominated by the 7-Eleven group, and continues to see a very rapid expansion,
with 7-Eleven adding more stores to 4,778 stores by year end. The second largest operator in this sector is
Family Mart with 564 stores. The convenience store sector has continued to focus on food and beverage sales in
2008 and will be increasing the participation of this group in the future.
Department Store Sector
The department store sector is dominated by two major players. ‘Central’ by the Central Retail Corporation
(“CRC”) and ‘The Mall’ by The Mall Group Company Limited. Although the department store sector continues to
face competition from the discount/hypermarket stores, the different shopping environments, promotional
campaigns and marketing activities of the department stores continue to retain a strong customer base. CRC has
been active in the development of specialty retail businesses, for example sporting products, office products,
electrical goods and home improvement products. Both these major department store groups are involved in new
luxury retail outlets in central downtown Bangkok. A result of which should be the making of Rama 1/Ploenchit
area of Bangkok a comparable retail experience to Singapore's Orchard Road.
Now and the Future
2008 has been a challenging year for the Thai retail industry due to the negative effects of reduction in consumer
confidence and thus spending resulted from political turmoil, commodity price fluctuation and Global Financial
Crisis. Despite this, the THB 1.4 trillion retail industry still generated a growth of 3% in 2008 due to aggressive
expansion of the discount stores and convenient stores sectors while department stores continuously organised
promotional campaigns to encourage consumers spending. Despite the modest growth in the industry and the
challenging market condition, Siam Makro managed to outperform the industry by registering double digit growth.
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2009 is expected to be an even more challenging year for retail industry both in term of economy and regulatory
requirement. Lower spending power in the market is anticipated as a result of the expected higher unemployment,
increased desire to save and consumers becoming more value conscious. This will lead to an increase in competitive
pressure in retail industry as players continue to push promotions campaigns, increase focus on value driven
preposition by increasing emphasis on house brands and offering new product innovation. The draft Wholesales
or Retail Operating Business Act has been brought back by the new government and the timeframe for
implementation, if at all, remains uncertain. However, if the draft is passed as a legislation, it will impose additional
restrictions on expansion. The legislation may also impose additional operational limitations which may lead to
increased cost of doing business in the future.
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2008 has been a challenging year, not only for Siam Makro, but also the entire wholesales and retail industry as
the economy performed poorly due to the Global Financial Crisis, unfavourable political environment and drastic
fluctuation in fuel and commodity prices. The economic outlook for 2009 remains gloomy and it is expected to be
an even more challenging year than 2008. For Siam Makro, despite the fact that we outperformed the industry in
2008 in sales growth, the management remains prudent in the way we conduct our business and has come up with
various initiatives with an aim to sustain sales and normal earning after tax growth and to maintain market share.
The main focus of 2009 is to build a platform to “Go and Grow” and we will be targeting the development of both
people and performance. Part of the growth strategy will be through better performance from existing stores,
expansion organically via new stores, new format and if possible through acquisition of synergistic businesses.
Nevertheless, these expansion plans will be critically assessed for return on investment and control of investment
cost, given current low construction material prices, will be among many fundamental factors.
In addition, remodeling projects will continue in 2009 for Non Food department, bakery department, spice room
and the conversion of Phuket store to become a full Eco store to enhance the professional food service provider
image. The Company will also continue to invest in store maintenance and equipment in order to improve the
operational efficiency.
One of the critical factors for a successful business is to have quality people contributing to its operation. Makro
recognises this and continues to invest in our people to prepare them not only for today's challenges but also for
future growth. The people development program will continue throughout 2009 with specific focus on succession
planning and development for top and middle level management and continue to identify internal talent for future
development. We will also organise more structured training for new stores opened in 2007 to ensure that the
new and old employees are integrated well with each other in order to optimise the performance. In addition,
training assessment will continue in 2009 through discussion and feedback and the correct training will be offered
where possible, either by means of in-house or external training.
To achieve sales growth, Siam Makro recognises that continual customer development will be an important
element. In 2009, the Customer Development Programs will continue to be rolled out with focus on development
of HoReCa, Food and Non Food, retailers and service customers in different stages of their life cycle. This is
achieved via increased emphasis on the external sales force and internal sales force to increase dialogue and
service to our core customer groups. The existing customer development programs will shift to the next phase
with the implementation of Professional Telesales Program to increase efficiency in communication with
participating customers. We will review the services provided in stores, not just in terms of range, assortment and
pricing but also in other areas, such as presentation and display. We will also review value-added services
provided to customers. Base on the success of the previous events, the Makro HoReCa Extravaganza will
continue to be organised to develop the HoReCa business.
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The MRA Project, which helps the small food retailers by equipping them with necessary retail knowledge and
forming a strong network, will continue to be implemented with increased effort. In 2009, we will focus on “MRA
Network Development” with an aim to strengthen the network and to expand our coverage nationwide through
various activities including training programs, advisory services, etc.
Siam Makro experienced significant growth in the past years such that the Distribution Centre (“DC”) for Dry Food
and Non Food was faced with a challenge as the volume going through this facility increased by 93% since 2006.
Siam Makro recognises the limitation of this facility and has therefore commenced investment in a new DC for Dry
Food and Non Food in Wang Noi, Phra Nakhon Siayutthaya, next to the new DC for fresh and frozen product.
The new DC is expected to go online in the middle of 2009. This new facility will be equipped with a sortation
system to automate the allocation of goods to each stores and this will increase the accuracy, productivity and
reduce cost associated with human errors. The new DC will be able to handle 72 million cases per year which
represents a 140% increased in capacity from the existing one and this will facilitate the Company’s vision for
future expansion.
Information Technology is the backbone of our operation and we will continue to invest both in technical and
operational perspective. Enhancements will be made in many areas of the business in 2009. These will include
projects like Centralised Customer Information System, E-Documents and a new loyalty program for our
customers, etc.
With the expected reduction in spending power within the economy in 2009 which will lead to customers
becoming more value driven, there will be an opportunity to promote the own brand range of products which offer
more value proposition. Siam Makro will review own brand strategy and strengthen the own brand development
team with an aim to develop more product offering and improve sales performance.
Siam Makro has been successful in achieving positive result in 2008 through the strict implementation of various
strategy including the focus on core customers, margin management, consolidation of new stores performance,
etc. However, the year ahead will be very challenging but through dedication and hard work, we will endeavour to
continue improving the performance through sales growth via business expansion within the target customer
group, grow the margin through closer relationships with suppliers, productivity improvement via greater
operational efficiency and optimisation of expenditures.
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Risk, complexity and uncertainty define all business environments. Risks to a business can be strategic, financial,
compliance, regulatory, natural or operational and systems derived in nature. Risks change constantly as
the internal and external dynamics within a business's operating environment change. There is internal risk within
the business itself, ranging through the spectrum. From the more traditional risks in the form of hazards, such
as fire and flooding, to risks in our operating environment, such as our reliance on information technology, to risk
in our employee workforce, for example in our ability to skill and retain our employees. There is also risk from
external factors; from our interactions with others, our relationships as supplier, customer, employer and
investor - factors outside our control, which have significant impact to the environment we operate in and the
results we achieve. Major risks we currently face include stock market risk, shareholder risk, and economic risk,
competitive risks such as the actions of our competitors, regulatory and legislative risk, employee risk and
information technology risk.
The Company is listed on the Stock Exchange of Thailand (“SET”), and its share price is, therefore, impacted by
market sentiment, locally, regionally and internationally. Local market sentiment is driven by political and
economic conditions in Thailand, regionally and internationally, and by speculation. There have been many
negative factors impacting market sentiment in 2008, both at the national and international level, the decline in
consumer consumption, unfavourable political environment, and the Global Financial Crisis. These negative
factors caused the SET to performed significantly lower in 2008 decreasing by 47.6% from 858.10 in 2007 to
449.96 in 2008.
Although we are a public listed company a significant proportion of our equity is held by a limited number of
shareholders, primarily the SHV group base in the Netherlands that, the Company has had a long relationship
with the SHV group, and through this relationship has conducted a cash and carry business in Thailand for 19
years. Our management team comprises a highly skilled and experienced team, with both international and Thai
experience, and has, therefore, a high level of knowledge, understanding and competence in the Thai
wholesales, retail and supply chain industries. We do, however, consult with SHV in certain aspects of our
business, for example in areas of finance and information technology. Furthermore, we also have certain software
and license agreements with members of the SHV group. Such agreements are subject to annual renewal and
we are not aware of any factors that would impact such renewal. We are not reliant upon any other shareholder in
the ordinary course of our business and do not consider that changes in shareholding interests, other than those
made by SHV, our principal shareholder, would significantly impact our business.
As a Cash and Carry wholesaler we believe that we are less exposed to downturns in consumer confidence than
the discount and hypermarket operators as our core customer base are not end-users. However, all businesses
are sensitive to the economic environment in which they operate in various degrees and the recent slowdown in
Thai economy has impacted our performance. Nevertheless, as a Cash and Carry operator our commercial
structure partly mitigates such risks, as we are not exposed to bad debt risk, as sales are substantially in cash
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and our working capital position is favourable. As a food wholesaler, particularly with our focus on fresh food,
we are exposed to potential negative impact on sales arising from food scares, for example the negative impact
on chicken sales that arises from outbreaks of bird flu or similar diseases in the region. The increasing attention
paid to food safety and food hygiene by our customers is becoming more evident as the consumer becomes
more sophisticated. Although, we source our fresh food from reliable and certified suppliers and impose strict
cleanliness and hygiene standards on our Distribution Centre, stores and staff, we are exposed to potential
negative sentiment and corresponding adverse impact on sales from general scares and alerts within the region.
Competition in the modern wholesales and retail sector remains aggressive, with many operators having
undertaken rapid expansion through new formats and new stores in recent years such that the overall wholesales
and retail trade now is fundamentally different to that of 10 years ago. The impact of Zoning Law, Building Control
Act and related notifications, which were introduced in 2003, has significantly curtailed operators' ability to grow
through expansion within built up urban areas.
The growth of the modern wholesales and retail sector in Thailand in the last decade, whilst benefiting the Thai
consumer by expanding their choice, and the quality and value of retail offerings, has been perceived to have
significantly impacted other sectors of the economy, including the traditional wholesales and retail sector. This
perceived adverse impact encouraged calls for legislative and regulatory intervention, and 2003 saw the
implementation of significant Notifications regarding zoning, the impact of which is discussed above, and anti-
competition legislation. The reinforcement of Competition Act in 2003 focused in respect to market domination
and unfair trade practices, Under the section 18 (2) of Competition Act, the office of the Trade Competition
Commission has issued the guidelines for determination of Trade Practices between Wholesale-Retail Business
operator and Manufacture or Distributor which came into force on October 12, 2006 and in January 2007, the
cabinet approved the definition of business operator having dominant position in the market. These regulations
will create hurdles within our business operations.
The prohibition to forestall and increase the goods price by virtue of an order of the Council for Democratic
Reform under Constitutional Monarchy in September 2006 has been repealed since April 2007, the wholesale
and retail sales business sector still continues being affected because of the request for its cooperation to
continue fixing the price under the Ministry of Commerce’s policy to strictly regulate and administer the price of
consumer goods by virtue of the Act on Prices of Goods and Services B.E. 2542 (1999) including the close control
of the price adjustment. The Government continuously applied this policy throughout 2008, despite the significant
fluctuation in energy and commodity prices included rice, sugar and cooking oil.
The enforcement of the Wholesale or Retail Operating Business Act is another risk factor in the business
operation which might occur in the future. This draft act has received an approval of the Cabinet in mid 2007.
However, it has not been scrutinized by the National Legislative Assembly (“NLA”). The said draft has been
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brought up for discussion by the new government. In case the draft of the Wholesale or Retail Operating
Business Act becomes enforceable, the operation of the wholesale and retail sales business sector will be
affected, i.e. the expansion of branches, the restriction of business hours etc. The said matters will require an
approval in accordance with criteria, procedure and conditions to be prescribed by an issuance of the Ministerial
regulations.
With public safety and social welfare in mind, the government passed 2 new legislations which came into effect in
2008 and 2009. The Alcohol Beverage Control Act, by Ministry of Health, came into effect in February 2008 with
an aim to reduce social problems caused by alcohol. This legislation places limitation to the ability to advertise
alcoholic products and to organise sales promotion campaign. The Product Liability Act, by Consumer Protection
Board, was published in The Government Gazette in February 2008 and will come into effect in February 2009.
This legislation stipulates that business operators must be liable for damages resulting from unsafe product. With
full implementation of the mentioned legislations, the Company will have to be more prudent in term of
compliance in order to avoid potential risk and this will increase both the level of complexity in operational
processes and cost of doing business.
Compliance, operational and systems risk management is ongoing, and subject to continual review. We have
skilled employees across all aspects of the business that are up to date with global developments in retail and
management and the Board of Directors actively review our risk exposure in these areas. We continually train
and invest in our employees but must compete against other employers in Thailand to secure the best
employees out of a relatively small pool of skilled labour. There is continued demand for skilled employees,
especially in the provincial areas, and there is risk that we will be unable to recruit and retain employees with the
levels of skills that we require. Furthermore, the modern retail trade represents a highly challenging work
environment, in which both succession and continuity in our employee base are important to achieve the growth
that we seek. As investment in employee development continues there is also increased risk that we will invest
resources in our staff, but be unable to reap the benefits if those employees leave us for our competitors. We
believe that the meritocratic environment that we offer, the support and training programs that we provide, the
feeling of teamwork coupled with the family environment that exist amongst our staffs will help reduce our risk in
obtaining and retaining the quality staffs that we need to manage and grow our business.
We use information technology throughout our organisation and it is fundamental to our ability to do business.
Our use of information technology includes links with parties’ external to our organisation, for example through
our B2B platform, and through the use of email and such communication tools. Furthermore, our operational
systems are fully computerised. We are, therefore, exposed to potential adverse impact on our business should
our information technology fail, or otherwise become corrupted, for example through exposure to electronically
communicated viruses. Our information technology department is active in ensuring that the Company is properly
and effectively safeguarded against such risk.
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1988 : Setting up the Company with the registered capital of Baht 750 million.
1989 : Opening 1st Makro store in Lardprao.
1990 : Opening Makro stores in Chaengwattana, Srinakarin and Bangbon.
Setting up its subsidiary company namely Makro Properties Ltd.
1993 : Opening Makro stores in Chonburi and Chiang Mai.
1994 : Increasing its registered capital to Baht 2,400 million.
: Opening Makro stores in Nakhon Ratchasima, Rangsit and Hat Yai.
: Becoming a listed company on the Stock Exchange of Thailand.
1995 : Opening Makro store in Udonthani.
1996 : Opening Makro stores in Phitsanulok, Khon Kaen, Surat Thani and Ubol Ratchathani.
1997 : Opening Makro store in Rayong.
1998 : Opening Makro store in Nakhon Sawan.
1999 : Opening Makro store in Charansanitwongse, Bangkok.
2000 : Opening Makro stores in Sathorn, Bangkok and Nakhon Pathom.
2001 : Opening Makro store in Surin.
2002 : Opening Makro store in Samsen.
2003 : Opening Makro stores in Nakhon Si Thammarat and Chiang Rai.
: Remodelling 3 existing stores (Lardprao, Chaengwattana and Srinakarin) to have new format
to focus on a wholesale cash and carry business and a one-stop shop for food service.
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2004 : Opening Makro stores in Sakon Nakhon, Suphan Buri, Chanthaburi, Phuket, Roi Et and Trang.
: Remodelling 7 existing stores (Bangbon, Chonburi, Chiang Mai, Hat Yai, Nakhon Sawan, Sathorn
and Samsen) to have new format.
2005 : 1 January 2005, acquired 100% shares of Siam Food Services Limited.
: Remodelling 9 existing stores (Charansanitwongse, Surat Thani, Nakorn Pathom, Phisanulok,
Udonthani, Rangsit, Nakhon Ratchasima, Khon Kaen and Rayong) to have new format.
2006 : Remodelling 2 existing stores (Surin and Ubol Ratchathani) to have new format.
2007 : Opening 12 new Makro stores i.e. Sakaeo, Ko Samui, Buri Ram, Sisaket, Lamphun, Krabi,
Phetchaburi, Chaiyaphum, Saraburi, Pran Buri, Chachoengsao and Chiang Mai 2.
: Remodelling non-food area of 3 existing stores (Sathorn, Chaengwattana and Bangbon)
to have new assortment and display to cope with our strategy in a wholesale cash and carry business.
: Installation of air conditioning to enhance our customers' service satisfaction including review of
assortment and re-display the product in 3 small stores (Sakon Nakhon, Suphan Buri and Roi Et).
: Launching “Makro Retailer Alliance (MRA)” project in order to continuously develop our member
customers to improve their competitiveness.
2008 : Remodelling non-food area of 4 existing stores (Chonburi, Chiang Mai, Rangsit and Charansanitwongse)
to have new assortment and display to cope with our strategy in a wholesale cash and carry business.
: Installation of air conditioning to enhance our customers’ service satisfaction including review of
assortment and re-display the product in 4 small stores (Nakhon Si Thammarat, Chiang Rai,
Chanthaburi and Trang).
: Continue to run “Makro Retailer Alliance (MRA)” project activities by opening a MRA Centre at
Makro Lardprao branch as well as organising Retailer Expo, training sessions and seminars
for small retailer operators and their successors to improve their competitiveness.
CORPORATE ACHIEVEMENTS
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1. General Information of the Company, Subsidiaries and Associated Company
1.1 Siam Makro Public Company Limited
Company registration No. : 0107537000521 (Former no. Bor Mor Jor. 299)
Date of incorporation : May 10, 1988
Head office : 3498 2nd Floor, Lardprao Road, Klongchan, Bangkapi, Bangkok 10240
Tel. 0-2375-7000, 0-2723-1000 Fax. 0-2375-2927
Home Page www.siammakro.co.th
Type of business : Operating cash and carry wholesale business, selling both food and
non-food products to registered members
Type and No. of shares : Registered ordinary shares with number of shares 240,000,000 shares
Registered capital : 240,000,000 shares at a par value of Baht 10 each, totalled Baht 2,400,000,000
Issued and paid-up capital : 240,000,000 shares at a par value of Baht 10 each, totalled Baht 2,400,000,000
1.2 The Subsidiary and Associated Companies
The Subsidiary Companies
(1) Makro Properties Ltd.
Company registration No. : 0105533040004 (Former no. 4000/2533)
Date of incorporation : April 5, 1990
Head office : 3498 Lardprao Road, Klongchan, Bangkapi, Bangkok 10240
Tel. 0-2375-7000, 0-2723-1000 Fax. 0-2375-2927
Type of business : Land investment and property leasing
Type and No. of shares : Registered ordinary shares with number of shares 7,000,000 shares
Registered capital : 7,000,000 shares at a par value of Baht 100 each, totalled Baht 700,000,000
Issued and paid-up capital : 7,000,000 shares at a par value of Baht 100 each, totalled Baht 700,000,000
OTHER INFORMATION
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(2) Siam Food Services Limited
Company registration No. : 0105527032739 (Former no. 3276/2527)
Date of incorporation : September 7, 1984
Head office : 2439 Old Paknam Railway Road, Prakhanong, Klongtoey, Bangkok 10110
Tel. 0-2240-4000 Fax. 0-2249-7294
Home Page www.siamfoodservices.com
Type of business : Specialising in the import and distribution of value added,
temperature controlled, high specification meats, seafood, poultry, potato,
dairy and ethnic food products of both international and domestic brand
owners. Distribution reach is nationwide to all provinces of Thailand.
Type and No. of shares : Registered ordinary shares with number of shares 100,000 shares
Registered capital : 100,000 shares at a par value of Baht 100 each, totalled Baht 10,000,000
Issued and paid-up capital : 100,000 shares at a par value of Baht 100 each, totalled Baht 10,000,000
(3) Makro Office Centre Co., Ltd.
On 28 May 2008, Siam Makro Public Company Limited has entered into a Share Sale and Purchase
Agreement in order to sell its shares in Makro Office Centre Co., Ltd. to Office Club (Thai) Co., Ltd. The
shares were transferred on 1 June 2008 at the price of Baht 403.4 million.
The above mentioned transaction does not fall within the rules relating to the Acquisition and
Disposition of Assets of Listed Companies and Connected Transactions as per the Notification of the
Stock Exchange of Thailand.
The Associated Company
- None -
OTHER INFORMATION
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1.3 Reference Persons
Share Registrar : Thailand Securities Depository Co., Ltd.
62 The Stock Exchange of Thailand Building,
4th, 7th Floor, Ratchadaphisek Road, Klongtoey, Klongtoey, Bangkok 10110
Tel. 0-2229-2800, 0-2654-5599 Fax. 0-2359-1259
Auditor : Mr. Somchai Jinnovart C.P.A Reg. No. 3271
Ms. Nangnoi Charoenthaveesub C.P.A Reg. No. 3044
Mr. Prasan Chuapanich C.P.A Reg. No. 3051
PricewaterhouseCoopers ABAS Ltd.
15th Floor, Bangkok City Tower
179/74-80 South Sathorn Road, Tung Mahamek, Sathorn, Bangkok 10120
Tel. 0-2286-9999, 0-2344-1000 Fax. 0-2286-5050
Legal Counsel : Siam City Law Offices Limited
20th Floor, Rajanakarn Building,
183 South Sathorn Road, Yannawa, Sathorn, Bangkok 10120
Tel. 0-2676-6667-8 Fax. 0-2676-6188-9
Dej Udom & Associates Ltd.
9th Floor, Charn Issara Tower,
942/142-3 Rama IV Road, Suriyawong, Bangrak, Bangkok 10500
Tel. 0-2233-0055 Fax. 0-2236-6681
OTHER INFORMATION
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2. Nature of Business
Revenue Structure of Company Group (Revenue net of inter-group transactions)
Activities/Products/Services Operate by Shareholding of 2008 2007 2006
Company (%) Mil. Baht % Mil. Baht % Mil. Baht %
Makro Cash and Carry
Sales of consumer goods Siam Makro Plc. � 72,869 98.1 61,611 96.4 55,060 95.9
and other income
Total 72,869 98.1 61,611 96.4 55,060 95.9
Makro Office Centre
(1)
Sales of goods Makro Office 99.99 671 0.9 1,566 2.4 1,545 2.7
and services Centre Co., Ltd.
and other income
Total 671 0.9 1,566 2.4 1,545 2.7
Property Rental
Property rental Makro 99.99 8 - 7 - 7 -
and services Properties Ltd.
and other income
Total 8 - 7 - 7 -
Importing and
trading frozen foods
Sales of goods and services Siam Food 99.99 762 1.0 750 1.2 795 1.4
and other income
(2) Services Limited
Total 762 1.0 750 1.2 795 1.4
Grand total 74,310 100 63,934 100 57,407 100
Remark : (1) On 28 May 2008, Siam Makro Public Company Limited has entered into a Share Sale and Purchase
Agreement in order to sell its shares in Makro Office Centre Co., Ltd. to Office Club (Thai) Co., Ltd.
The shares were transferred on 1 June 2008 at the price of Baht 403.4 million.
(2) After elimination of sales to Siam Makro Plc.
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3. Shareholding Structure and Management
3.1 Shareholders
Major Shareholders
Major shareholders as at the latest book closing date (November 24, 2008)
Name No. of shares % of all shares
1.) Siam Makro Holding (Thailand) Ltd. 132,015,140 55.006
2.) Orkam Holding Asia N.V. 14,898,160 6.208
3.) Somers (U.K.) Limited 11,466,300 4.778
4.) Social Security Office 5,897,600 2.457
5.) State Street Bank and Trust Company for London 5,742,900 2.393
6.) HSBC (Singapore) Nominees PTE Ltd. 5,290,900 2.205
7.) BNP Paribas Securities Services Luxembourg 4,654,200 1.939
8.) Nortrust Nominees Ltd. 3,510,142 1.463
9.) American International Assurance Company, Limited-APEX 2,961,700 1.234
10.) State Street Bank and Trust Company for Australia 2,929,700 1.221
Major Shareholder Groups
The major shareholder groups as stated on the latest book closing date on November 24, 2008 are as follows :
Name No. of shares % of all shares
1. SHV Group
- Orkam Holding Asia N.V. 14,898,160 6.208
2. Joint venture among SHV Group
and other shareholders
- Siam Makro Holding (Thailand) Ltd. 132,015,140 55.006
Remark : 1. SHV Group is a major shareholder and has appointed its representatives to be the
Company's directors.
2. Investors can visit the Company’s website www.siammakro.co.th for more update
information before Annual General Shareholders’ Meeting.
OTHER INFORMATION
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Siam Makro Public Company Limited
Organisation Structure as at 31 December 2008
Board of Directors
Audit Committee PresidentCompany
Secretary
Internal Audit
Human
Resources
Director
Finance
Director
Information
Services
Director
Operations
Director
Marketing and
Business
Development
Director
Area Manager
Store General Manager
Commercial
Director
(Fresh Food)
Commercial
Director
(Non-Food)
Executive Commercial
Director (Dry Food
and Supply Chain
Management)
Associate
Director
(Finance)
Associate
Director
(Operations)
Associate
Director
(Marketing)
Associate
Director
(Non-Food)
Associate
Director
(Dry Food)
Nomination and
Remuneration
Committee
Executive Board
OTHER INFORMATION
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3.2 Management
(1) Management Structure
The Company’s management structure comprises the Board of Directors, Executive Board,
Audit Committee and Nomination and Remuneration Committee.
Board of Directors
Name of Members of the Board of Directors as at December 31, 2008
1. Mr. Dhanin Chearavanont Independent Director and Honorary Chairman
2. Mr. Arsa Sarasin Independent Director and Chairman
3. Mrs. Suchada Ithijarukul Vice Chairman
4. Mr. Dennis Casey Director
5. Mr. Prasert Jarupanich Independent Director
6. Mr. Ruurd Jacobus Faber Director
7. Mrs. Saowaluck Thithapant Director
8. Mr. Stephan Ronald Nanninga* Director
9. Mr. Athaporn Khaimarn Independent Director and Chairman of the Audit Committee
10. Mr. Chavalit Uttasart Independent Director and Member of the Audit Committee
11. Mr. Thira Wipuchanin Independent Director and Member of the Audit Committee
Remark : 1. * Substituted the director who resigned during the year.
2. Independent Director means director who is not an executive director, major shareholder
of the Company and does not involve in the day-to-day operations of the Company.
Functions and Responsibilities of Directors
1. To comply with all laws and regulations, all objects and articles of association of the Company,
and carry out their duties in line with the resolutions of shareholders’ meeting in good faith and
with care to preserve the interests of the Company and to ensure the management’s
accountability to shareholders.
2. To implement and direct the Company’s policies, as well as monitor and supervise its operations.
3. To follow and monitor the business’s performance and the operations of the Company continuously,
according to its by-laws and regulations and to be notified by the management of any
significant matters regarding the Company’s business.
4. To maintain the effectiveness of the Company’s internal control and internal audit.
Company Secretary
The Board of Directors has appointed Miss Nilobon Tangprasit as the Company Secretary to be
responsible for the following proceedings on behalf of the Company or the Board of Directors:
1. Preparing and keeping the following documents:
(a) a register of directors;
OTHER INFORMATION
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(b) notices calling for the directors’ meetings, minutes of the Board of directors’ meetings and
the annual reports;
�c) notices calling for the shareholders’ meetings and minutes of the shareholders’ meetings.
2. Keeping reports on interest reported by the directors or the executive.
3. Performing any other act as prescribed in the Notification of the Capital Market Supervisory Board.
4. Submitting a copy of the reports on interest (of director/ executive/ related person) to Chairman of
the Board and Chairman of the Audit Committee within 7 days from the date on which the
Company receives the said reports from the directors and the executive.
5. Performing the duties described above with care and responsibility and in good faith as well as in
compliance with the laws, the objectives, the Articles of Association of the Company, and the
resolution of the Board of Directors and of the shareholders' meetings.
Biographical Information of the Company Secretary
Miss Nilobon Tangprasit (49)
Position Company Secretary
Shareholding None
Relationship with Executives None
Education LL.B (Honors), Chulalongkorn University
Barrister-at- law (The Institute of Legal Education, Thailand)
Certificate in Attorney Assistant Training Program, Litigation/Corporation,
UCLA Extension, School of Law, Los Angles, California, U.S.A.
LL.M, Temple University, School of Law, at Philadelphia,
Pennsylvania, U.S.A.
Working Experience 1986 - 1989 Lawyer (In house) B.Grimm&Co
1989 - 2004 Partner of International Legal Counsellors Thailand Ltd.
2005 - present Director/Partner of Siam City Law Offices Ltd.
2008 - present Company Secretary, Siam Makro Plc.
Note : ( ) age at December 31, 2008
Executive Board
Name of Members of the Executive Board as at December 31, 2008
1. Mrs. Suchada Ithijarukul Chairman of the Executive Board and President
2. Mr. Dennis Casey Executive Director
3. Mr. Ruurd Jacobus Faber Executive Director
4. Mrs. Saowaluck Thithapant Executive Director
Functions and Responsibilities of the Executive Board
1. To determine the Company’s strategy and business plans of each business including investment,
human resources, performance appraisals and remuneration.
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2. To prepare budgets and investment projects of each business and submit to the Board of Directors
for approval.
3. To follow and monitor the operating performance and the progress of investment projects in each
business together with performance report, problems and obstacles encountered and possible
solutions to the Board of Directors.
4. To follow and monitor developments in management and risk management system of each business.
5. To follow and monitor human resource development, management promotion and rotation in each
business according to the Company’s plans.
6. Being the authorised directors whose signatures bind the Company (Joint signatures of two directors
affixed by the Company seal).
Audit Committee
Name of Members of the Audit Committee as at December 31, 2008
1. Mr. Athaporn Khaimarn Chairman of the Audit Committee
2. Mr. Chavalit Uttasart Member of the Audit Committee
3. Mr. Thira Wipuchanin Member of the Audit Committee
Remark : Mr. Athaporn Khaimarn, Chairman of the Audit Committee has expertise and experience to
review creditability of the financial reports. His working experience is shown on page 47.
Functions and Responsibilities of the Audit Committee
1. To review the Company’s financial reporting process to ensure that it is accurate and adequate;
2. To review the Company’s internal control system and internal audit system to ensure that they
are suitable and efficient, and to determine an independent of the internal audit unit, as well as
to approve the appointment, transfer and dismissal of the chief of an internal audit unit or any
other unit in charge of an internal audit;
3. To review the Company’s compliance with the law on Securities and Exchange, the SET’s
regulations, and the laws relating to the Company’s business;
4. To consider, select and nominate independent persons to be the Company's auditors, and to
propose such persons’ remuneration, as well as to attend a non-management meeting with the
auditors at least once a year;
5. To consider the Connected Transactions, or the transactions that may lead to conflicts of interests,
to ensure that they are in compliance with the laws and the SET's regulations, to be ensured
that the said transactions are reasonable and made for the highest benefit of the Company;
6. To prepare the Audit Committee’s report which must be signed by the Audit Committee’s Chairman
and consist of at least the following information to be disclosed in the Company’s annual report:
(a) an opinion on the accuracy, completeness and creditability of the Company's financial report,
(b) an opinion on the adequacy of the Company’s internal control system,
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(c) an opinion on the compliance with the law on Securities and Exchange, the SET’s regulations,
or the laws relating to the Company’s business,
(d) an opinion on the suitability of an auditor,
(e) an opinion on the transactions that may lead to conflicts of interests,
(f) the number of the Audit Committee meetings, and the attendance of such meetings by each
member of the Audit Committee,
(g) an opinion or overview comment received by the Audit Committee from its performance of
duties in accordance with the charter, and
(h) other transactions which, according to the Audit Committee’s opinion, should be known to
the shareholders and general investors, subject to the scope of duties and responsibilities
assigned by the Company’s Board of Directors; and
7. To perform any other act as assigned by the Company's Board of Directors, with the approval of
the Audit Committee.
Nomination and Remuneration Committee
Name of Members of the Nomination and Remuneration Committee as at December 31, 2008
1. Mr. Prasert Jarupanich* Chairman of the Nomination and Remuneration Committee
2. Mr. Thira Wipuchanin* Member of the Nomination and Remuneration Committee
3. Mr. Ruurd Jacobus Faber Member of the Nomination and Remuneration Committee
Remark : * Being the Company’s Independent Director.
Functions and Responsibilities of the Nomination and Remuneration Committee
1. Select and nominate a suitable and qualified persons to be members of committees with a
composition and qualification prescribed by the law/relevant regulations and present its
recommendation to the Board of Directors to consider and approve or to present the same to
the shareholders' meeting to consider and approve (as the case may be);
2. Consider criteria and determination of remuneration for the Company's directors and the committees
appointed by the Board of Directors to be consistent with and suitable to the Company’s
performance and responsibilities in comparison with the remuneration level of other companies
in the same industry. In case the Nomination and Remuneration Committee considers that there
should be any change from those adopted by the previous resolution of the shareholders’
meeting, the said Committee must present the matter to the Company's Board of Directors to
consider for presenting to the shareholders’ meeting to consider and approve.
3. Perform other works assigned by the Board of Directors.
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The Criteria of Independent Director Selection
Qualifications of the Independent Director
The Independent Director must possess qualifications according to the criteria as follows :
1. Holding shares not more than 5 percent of paid-up capital of the company, affiliated company,
associated company or related company, which shall be inclusive of the shares held by related
persons.
2. - Being the director who does not take part in the management of the company, affiliated company,
associated company, related company or majority shareholder of the company.
- Not being an employee, staff member or advisor who receives a regular salary from the company,
affiliated company, associated company or related company or majority shareholder of the company.
3. - Being a director who has no direct or indirect benefit or interest in finance and management of the
company, affiliated company, associated company or majority shareholder of the company.
- Being a director who has benefit or interest of the said nature during the period of 1 year before
his appointment as an Independent Director except where the Board of Directors has carefully
considered that such previous benefit or interest does not affect the performance of duties
and the giving of independent opinions.
4. Being a director who is not a related person or close relative of any management member or
majority shareholder of the company.
5. Being a director whom is not appointed as a representative to safeguard interests of the company’s
directors, majority shareholders or shareholders who are related to the company’s majority
shareholders.
6. Being capable of performing duties, giving opinions or reporting the results of performance of
work according to the duties delegated by the Board of Directors free and clear of the control of
the management or the majority shareholders of the company including related persons or
close relatives of the said persons.
Remark : Related persons mean to include persons who have relationship with or are related to
the company to the extent that they cannot perform their duties independently or in a
flexible manner.
Independent Director Nomination
Independent Director Nomination is as in the clause of Directors Nomination on page 52.
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Biographical Information of the Company’s Directors and Executives
Directors
Mr. Dhanin Chearavanont (69)
Position Independent Director and Honorary Chairman
Shareholding 10 shares (no change)
Relationship with Executives None
Education Commercial School, Hong Kong
National Defence College
Certificate in Director Accreditation Program initiated by the Thai Institute of Directors
Working Experience 1988-1999 Chairman, Siam Makro Plc.
1999-2007 Honorary Chairman, Siam Makro Plc.
1989-present Chairman & CEO, Charoen Pokphand Group Company Limited
and its subsidiaries
1993-Present Chairman, Charoen Pokphand Foods Plc. and its subsidiaries
Chairman, True Corporation Plc. and its subsidiaries
1999-Present Chairman, CP ALL Plc. and its subsidiaries
(Previous name of CP ALL Plc. is C.P. Seven Eleven Plc.)
2007-present Independent Director and Honorary Chairman, Siam Makro Plc.
Mr. Arsa Sarasin (72)
Position Independent Director and Chairman
Shareholding 18,900 shares (no change)
Relationship with Executives None
Education B.A. in Business Administration, Boston University, U.S.A.
Certificate in Director Accreditation Program initiated by the Thai Institute of Directors
Working Experience 1994-1999 Independent Director and Honorary Chairman, Siam Makro Plc.
1999-2007 Chairman, Siam Makro Plc.
1992-present Chairman, Thai-Asia Pacific Brewery Co., Ltd.
1998-present Chairman, Padaeng Industry Plc.
1999-present Independent Director and Member of the Audit Committee,
Charoen Pokphand Foods Plc.
2001-present Director, The Siam Cement Plc.
2007-present Independent Director and Chairman, Siam Makro Plc.
Note : ( ) age at December 31, 2008
OTHER INFORMATION
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Mrs. Suchada Ithijarukul (56)
Position Vice Chairman and President
Shareholding None
Relationship with Executives None
Education Bachelor degree in Accountancy (Second Class Honours), Chulalongkorn University
Certificate in Directors Certification Program initiated by the Thai Institute of Directors
Working Experience 1995-2001 Finance Director, Siam Makro Plc.
1996-present Director, Siam Makro Plc.
Director, Makro Properties Ltd.
2001-present Vice Chairman and President, Siam Makro Plc.
2005-present Director, Siam Food Services Limited
Mr. Dennis Casey (57)
Position Director
Shareholding None
Relationship with Executives None
Education University of Michigan Strategy and Integration. Various leadership courses
Certificate in Director Accreditation Program initiated by the Thai Institute of Directors
Working Experience 2001-2003 CEO & Sales Development Director, AS Watson Philippines
2003-2004 Concept and Brand Development Director Group, AS Watson
Hong Kong
2004-2006 CEO Eastern Europe and Nordic Countries, Concept and
Brand Development Director Group, AS Watson Eastern
Europe, Latvia, Hong Kong
2006-2008 CEO, Makro Asia Management Ltd.
2006-present Director, Siam Makro Plc.
Present Director, Makro Asia Management Ltd.
Note : ( ) age at December 31, 2008
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Mr. Prasert Jarupanich (60)
Position Independent Director
Shareholding 10 shares (no change)
Relationship with Executives None
Education Ph. D. in Industrial Engineering and Management, Oklahoma State University
Certificate in Directors Certification Program initiated by the Thai Institute of Directors
Working Experience 1988-2007 Director, Siam Makro Plc.
1988-present Director, CP ALL Plc.
(Previous name of CP ALL Plc. is C.P. Seven Eleven Plc.)
2007-present Independent Director, Siam Makro Plc.
Mr. Ruurd Jacobus Faber (49)
Position Director
Shareholding None
Relationship with Executives None
Education B.A. Human Resources, Hogeschool of Amsterdam
Working Experience 1995-1999 Human Resources Director, NCR Corp.
2000-2008 Human Resources Director, Makro Asia Management Ltd.
2005-present Director, Makro Asia Management Ltd.
Director, Siam Makro Plc.
Mrs. Saowaluck Thithapant (53)
Position Director and Finance Director
Shareholding None
Relationship with Executives None
Education Bachelor degree in Accountancy (Second Class Honours), Thammasat University
Bachelor degree in Laws, Thammasat University
Master degree in Accountancy, Thammasat University
Certificate in Director Accreditation Program initiated by the Thai Institute of Directors
Working Experience 1997-1999 Vice President-Accounting and Finance, Premier Enterprise Plc.
1999-2002 Senior Vice President-Accounting and Finance,
Premier Group of Companies
2002-present Finance Director, Siam Makro Plc.
Director, Makro Properties Ltd.
2004-present Director, Siam Makro Plc.
2005-present Director, Siam Food Services Limited
Note : ( ) age at December 31, 2008
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Mr. Stephan Ronald Nanninga (51)
Position Director
Shareholding None
Relationship with Executives None
Education Master Degree in Law (Rotterdam)
Master Degree in Business Administration (Delft)
Working Experience 1993 Branch Manager/ Member of the Board,
Technische Unie BV Amstelveen
1999 Group Managing Director Distribution Europe,
CRH Nederland BV Rijswijk
2007-present Member of the Executive Board of Directors,
SHV Holdings NV Utrecht
Aug 2008- Director, Siam Makro Plc.
present
Mr. Athaporn Khaimarn (64)
Position Independent Director and Chairman of the Audit Committee
Shareholding None
Relationship with Executives None
Education Associate member of the Institute of Chartered Accountants in Australia
Associateship in Accounting from Western Australia Institute of Technology
(Now, Curtin University of Technology)
Certificate in Director Accreditation Program initiated by the Thai Institute of Directors
Working Experience 1992-1996 Managing Director, Price Waterhouse, Bangkok
Present Independent Director and Chairman of the Audit Committee,
Goodyear (Thailand) Plc.
1999-present Independent Director and Chairman of the Audit Committee,
Siam Makro Plc.
Note : ( ) age at December 31, 2008
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Mr. Chavalit Uttasart (60)
Position Independent Director and Member of the Audit Committee
Shareholding None
Relationship with Executives None
Education LL.B. (Second Class Honours), Chulalongkorn University
Barrister-At-Law, The Institute of Legal Education
Barrister-At-Law, Gray’s Inn, London
Certificate in Director Accreditation Program initiated by the Thai Institute of Directors
Working Experience 1977-2005 Director, International Legal Counsellors Thailand Ltd.
2005-Present Managing Director, Siam City Law Offices Limited
1999-present Independent Director and Member of the Audit Committee,
Siam Makro Plc.
Mr. Thira Wipuchanin (59)
Position Independent Director and Member of the Audit Committee
Shareholding None
Relationship with Executives None
Education B.Sc. in Economic and Business Administration,
University of Wisconsin-Stevents Point, U.S.A.
Certificate in Directors Certification Program initiated by the Thai Institute of Directors
Certificate in Audit Committee Program initiated by the Thai Institute of Directors
Working Experience 1990-1994 Thailand Representative, Prudential Asset Management Asia Ltd.
1995-1997 Senior Vice President, Premier Group of Companies
1998-2004 Senior Executive Vice President, Export – Import Bank of Thailand
Present Chairman and Independent Director, Interhides Plc.
Present Independent Director, Precious Shipping Plc.
Present Independent Director and Member of the Audit Committee,
Bangkok First Investment & Trust Plc.
Present Independent Director and Chairman of the Audit Committee,
United Palm Oil Industry Plc.
2003-present Independent Director and Member of the Audit Committee,
Siam Makro Plc.
Note : ( ) age at December 31, 2008
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Executives
Mrs. Suchada Ithijarukul (56)
Details as mentioned in Biographical Information of the Company’s Directors.
Mr. Philip William Cox (63)
Position Executive Commercial Director (Dry Food and Supply Chain Management)
Shareholding None
Relationship with Executives None
Education Attended the Sydney University to study Business Administration
Working Experience 1989-1997 Managing Director, Mah Boonkrong Sirichai Supermarket Co., Ltd.
1997-2007 Commercial Director (Dry Food), Siam Makro Plc.
2005-present Director, Siam Food Services Limited
2007-present Executive Commercial Director (Dry Food and
Supply Chain Management), Siam Makro Plc.
Mr. Louis Lin (45)
Position Commercial Director (Fresh Food)
Shareholding None
Relationship with Executives None
Education Business Manager Courses, Chung-Shin University
Working Experience 1990-2001 Fresh Food Manager, Wellcome Taiwan Dairy Farm
2001-2003 Commercial Director (Food), Makro Taiwan
2003-present Commercial Director (Fresh Food), Siam Makro Plc.
2007-present Executive Director, Siam Food Services Limited
Mr. David Yvon Joseph Francois Poussier (38)
Position Operations Director
Shareholding None
Relationship with Executives None
Education DEUG Sciences Economics, University of CAEN
Working Experience 1999-2000 Fresh Supervisor, Makro Portugal
2000-2005 Store Manager, Makro Portugal
2005-Dec 2005 Senior Operations Manager, Makro Asia Management Ltd.
2006-Jan 2009 Operations Director, Siam Makro Plc.
Note : ( ) age at December 31, 2008
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Mrs. Saowaluck Thithapant (53)
Details as mentioned in Biographical Information of the Company’s Directors.
Mrs. Boonsin Srilertchaipanij (55)
Position Human Resources Director
Shareholding None
Relationship with Executives None
Education B.A. Faculty of Arts (First Class Honours), Chulalongkorn University
Certificate in Directors Certification Program initiated by the Thai Institute of Directors
Certificate in Finance for Non-Finance Director initiated by the Thai Institute of Directors
Working Experience 1992-1997 Vice President-Administration & Personnel
Christiani & Nielsen (Thai) Plc.
1998-present Human Resources Director, Siam Makro Plc.
2000-present Director, Makro Properties Ltd.
2001-2004 Director, Siam Makro Plc.
2005-present Director, Siam Food Services Limited
May-Dec 2007 Director, Siam Makro Plc.
Mr. Chertchai Thirakul (48)
Position Information Services Director
Shareholding None
Relationship with Executives None
Education Bachelor Degree in Electrical Engineering (Second Class Honours),
King Mongkut Institute of Technology, Ladkrabang
Master Degree in Computer Science, University of Southwestern Louisiana, U.S.A.
Working Experience 1994-1997 Country Sales Manager, Oracle Systems (Thailand) Co., Ltd.
1997-present Information Services Director, Siam Makro Plc.
Note : ( ) age at December 31, 2008
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Remark :
Positions
1 = Honorary Chairman 2 = Chairman 3 = Vice Chairman
4 = Chairman of the Executive Board 5 = President 6 = Director
7 = Executive Director 8 = Independent Director 9 = Chairman of the Audit Committee
10 = Member of the Audit Committee
Subsidiary Companies
A = Makro Properties Ltd. B = Siam Food Services Limited
Related Companies
C = Makro Asia Management Ltd.
Details of the Board of Directors and Executives in the Company and its Subsidiaries and or Related Companies
as at December 31, 2008
Company Name Siam Makro Plc. Subsidiary Companies Related
Companies
Name A B C
Mr. Dhanin Chearavanont 1, 8
Mr. Arsa Sarasin 2, 8
Mrs. Suchada Ithijarukul 3, 4, 5 6 6
Mr. Dennis Casey 6, 7 4
Mr. Prasert Jarupanich 8
Mr. Ruurd Jacobus Faber 6, 7 6
Mrs. Saowaluck Thithapant 6, 7 6 6
Mr. Stephan Ronald Nanninga 6
Mr. Athaporn Khaimarn 8, 9
Mr. Chavalit Uttasart 8, 10
Mr. Thira Wipuchanin 8, 10
Mrs. Boonsin Srilertchaipanij 6 6
Mr. Philip William Cox 6
Mr. Louis Lin 6
OTHER INFORMATION
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Details of Directors of Subsidiary Companies as at December 31, 2008
Subsidiary Companies Makro Properties Ltd. Siam Food Services Limited
Directors Name
Mrs. Suchada Ithijarukul Director Director
Mrs. Boonsin Srilertchaipanij Director Director
Mrs. Saowaluck Thithapant Director Director
Mr. Philip William Cox � Director
Mr. Louis Lin � Director
Miss Thanyamas Vorachart � Director
(2) Directors Nomination
The Company grants an opportunity to minority shareholders to nominate the suitable and
qualified persons to be considered for selection as directors of the Company in advance pursuant
to the Company’s criteria before the Annual General Meeting of Shareholders for the year 2009.
The Nomination and Remuneration Committee is responsible for selection and nomination the
suitable and qualified persons as directors or independent directors of the Company. The
deliberation of the Committee is presented to the Board of Directors for consideration. The Board
of Directors then presents its opinion to the shareholders’ meeting to consider and approve.
The resolution on the election of the directors must be adopted by an affirmative vote of a majority
vote of the total votes of shareholders attending the meeting and being entitled to vote pursuant
to criteria and procedures described in the Company’s Articles of Association as follows:
a) A shareholder shall have a number of votes which is equivalent to the number of shares held
by him;
b) Each shareholder may exercise all the votes he has under clause a), to elect one or more
persons as directors but he may not split his votes among any such persons;
c) The persons receiving the highest number of votes in the respective order of the votes shall
be elected as directors up to the total number of directors required or to be elected at such
time. In the event that a number of persons receiving an equal number of votes for the last
directorship exceed the number of directors the Company required or to be elected at such
time, the chairman of the meeting shall have a casting vote.
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If the directorship become vacant for any reason other than by rotation, the board of directors
shall elect a person who is qualified and not having a prohibited characteristics as provided in
Section 68 of the Public Limited Company Act B.E. 2535 as director to fill the vacancy at the
subsequent board of directors meeting unless the remaining term of the director is less than 2
months. The director who fills the vacancy shall retain his office only for the remaining term of
the office of the director whom he replaces. The resolution of the board of directors shall consist
of not less than three-fourth of the votes of the remaining number of directors.
(3) Remuneration of the Executives in 2008
Financial Remuneration
(a) The 12 directors (including director who resigned during the year) of the Company received
fee of Baht 11.88 million. The directors’ remuneration rates in 2008 are as follows.
Name Remuneration Rate
1. Mr. Dhanin Chearavanont 100,000 Baht/ Month
2. Mr. Arsa Sarasin 120,000 Baht/ Month
3. Mrs. Suchada Ithijarukul 80,000 Baht/ Month
4. Mr. Dennis Casey 80,000 Baht/ Month
5. Mr. Prasert Jarupanich 80,000 Baht/ Month
6. Mr. Ruurd Jacobus Faber 80,000 Baht/ Month
7. Mrs. Saowaluck Thithapant 80,000 Baht/ Month
8. Mr. Athaporn Khaimarn 110,000 Baht/ Month
9. Mr. Chavalit Uttasart 90,000 Baht/ Month
10. Mr. Thira Wipuchanin 90,000 Baht/ Month
11. Mr. Edwin Adriaan Leijnse 80,000 Baht/ Month
(Resigned during the year)
Mr. Stephan Ronald Nanninga 80,000 Baht/ Month
(Substituted)
Other Remuneration of Directors None
(b) The 4 directors of the Executive Board received the remuneration as member of the
Board of Directors.
(c) The 7 executives received remuneration in the form of salary and bonus with total
amount of Baht 94.04 million.
OTHER INFORMATION
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Other Remuneration
In 2008 the Company paid 7 executives other remuneration in the amount of Baht 19.86 million.
The remuneration consists of the Company’s contributed provident fund (3 % of salary) and the
expatriate executives’ expenses i.e. house rent, utility bills, telephone expenses, income tax
payable and travelling expenses etc.
Directors and Executives’ Shareholding Status in the Company and Affiliated Companies
As at December 31, 2008
Name and Position Company/Affiliated No. of shares held Increase/Decrease
Companies
1.) Mr. Dhanin Chearavanont
Independent Director and Siam Makro Plc. 10 No change
Honorary Chairman
2.) Mr. Arsa Sarasin
Independent Director and Siam Makro Plc. 18,900 No change
Chairman
3.) Mr. Prasert Jarupanich
Independent Director Siam Makro Plc. 10 No change
(4) Practice of Best Code for Directors of Listed Companies
In compliance with the Code of Best Practice for Directors of Listed Companies of the Stock
Exchange of Thailand, the Company’s Board of Directors has been performing their duties
according to the roles and responsibilities in compliance with laws and regulations, objectives
and articles of association of the Company as well as the resolutions of shareholders’ meetings
with honesty and care to preserve the interests of the Company, and have accountability to
shareholders. The Board of Directors has implemented and directed the Company’s policies,
monitored and supervised its operations as well as continuously followed and monitored the
business’s performance and the operations of the Company, according to its by laws and
regulations. In addition, the Board of Directors has maintained the adequacy of the Company’s
internal control and internal audit in order to ensure the effectiveness of the Company’s
operation.
OTHER INFORMATION
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(5) Supervision on Insider Trading
In order to prevent securities trading by using inside information and to prevent criticism on the
appropriateness of insider purchases or sales, the Company has supervisions and limitations on the
use of the Company’s information for personal benefit, as well as for securities trading. The Company
will keep confidential, material information which are not known to the public, and will be revealed only to
related senior executives. Senior executives who are able to access material information which is not
known to the public must report their purchases and sales of the Company’s securities pursuant to the
regulations of the SEC and SET, Re: Rules, Conditions and Procedures Governing the Preparation and
Disclosure of Reports on Securities Holding. Furthermore, the preparation and distribution of documents
related to such secret information will be done only by appropriate and related officers of the Company.
In addition, the Company has policy and made regular internal and public announcements and
notifications on the core values of the Company relating to the lawful and ethical conduct. In
particular, the use of material secret information, which may affect the trading of securities, as
well as gaining of personal benefit when dealing in securities. Such misconduct by revealing
material and internal information of the Company for personal benefit is strictly prohibited.
According to the Company’s policy, it is prohibit for the management and employee to use the
inside information for their own benefit. Our policy stipulate that each employee avoid any abuse
of insider knowledge and any mixing of personal and business interests, and the appearance of
such an abuse or conflict of interest. A strict obligation of secrecy applies.
(6) The Opinion of the Board of Directors Concerning Internal Control of the Company and Its
Subsidiaries
The Company’s Board of Directors, which compose of the Company’s Audit Committee, opined that
the financial systems, financial reports and financial audit of the Company and its subsidiaries
are reliable under adequate and appropriate internal control system. The Company’s internal
audit department continuously monitors its internal control system to ensure the adequacy and
effective implementation of the internal process in accordance with the Company’s policy.
(7) Dividend Payment Policy
Unless it is feasible to do so, the Company’s Board of Directors intends to propose to
shareholders’ meeting for approval of the Company to pay dividend not less than 40 percent of
its net profit after income tax, subject to annual operating performance. Starting from the
financial year of December 31, 1994.
In addition, the dividend payment policy of the subsidiaries, the Board of Directors of the
subsidiaries shall consider paying the dividend on occasion.
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4. Related Transactions with the Conflict of Interested Persons
In 2008 the Company and its subsidiaries had incurred transactions with the conflict of interested persons.
The related transactions are shown on page 92 in clause 9 “Related Party Transactions” of Notes to the
Consolidated and Company Financial Statements for the years ended 31 December 2008 and 2007 which
is audited by the certified public accountant.
Feature of Relationships and Related Transactions
Service expenses
The Company and its subsidiaries have been granted rights to use the software, trademarks and received
consultant services in relation to own brand development, management services and technical assistance
in auction purchasing and maintenance services for application software from both local and overseas
affiliated companies, being members of SHV Group as follows :
Company Name Feature of Relation Amount (Baht Mil.)
1. Orkam Asia Trademark AG Affiliated company 140.3
2. Orkam Asia Management AG Affiliated company 5.3
3. Makro Asia Management Ltd. Affiliated company 2.0
Total 147.6
Pricing Policy of Related Transactions
Service expenses i.e. software license fees, royalty fees, consultant service fees, management fees and
maintenance service fees for the use of such trademarks and services are as specified in agreements and
are on a reasonable basis for the Company and its subsidiaries as follows :
a) Royalty fee for the use of trademarks is 0.5 percent of sales volume of the first-10 stores of the Company
and all stores of its subsidiaries subtracted by value of goods return and VAT. The agreement is valid for
1 year. However, the Company and its subsidiaries reserve the right to renew the agreement every year
and have the right to use such trademarks and service marks in business operations.
b) Annual maintenance fee is 20% of the total user license fees in which each license fee costs USD 550
per user. The agreement is for unlimited period of time, unless party shall terminate the agreement by
written notice. The Company will receive maintenance services for the application software.
c) Annual fee for commercial consultant service in relation to the development and implementation regarding
joint buying, private label and auction activities is charged in Baht 2,000,000 (2007 : Baht 14,190,000).
The agreement is valid for 1 year and expired 31 December 2008. Regarding the benefit from this
service agreement, the Company will receive consultant service in order to improve the cost structure,
the efficiency and quality of the buying process.
d) Maintenance fee regarding business intelligence application is charged at EUR 750 per user and annual
maintenance fee is 25% of the total user license fee. The agreement is for unlimited period of time,
unless party shall terminate the agreement by written notice. Regarding the benefit from these service
agreements, the Company will receive maintenance services for the application software.
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Necessity and Reasons of Related Transactions
In respect of service expenses i.e. the use of software license, trademarks and consultant services in
relation to own brand development, management services and technical assistance in auction purchasing
and maintenance services for application software, the Company and its subsidiaries have been supported
in technical service and management for the Company and its subsidiaries’ core business operations by
local and overseas affiliated companies and costs of the use of software are cheaper than local system
development.
Measures or Procedures for Approving Transactions and Policy for Future Transactions
The related transactions are incurred only when required as normal course of doing business and for the
benefit of the Company and its subsidiaries. The use of software license, trademarks and consultant
services in relation to own brand development, management services and technical assistance in auction
purchasing and maintenance services for application software are necessary for business operations.
Such transactions are reviewed by our Audit Committee and the Audit Committee is of the opinion that
transactions are on the fair and reasonable basis. The transactions must be approved by our Board of
Directors which is in line with the Company’s Articles of Association before the transactions are taken. In
the future, the Company and its subsidiaries have policy to incur the related transactions when and only if
its business operations are required to do so and receive the approval from the Board of Directors before
entering into those related transactions. Terms and conditions of all transactions will be treated in the same
manner as the other third-party transactions.
In addition, the Company’s Board of Directors unanimously approved in principle the Company and its
subsidiaries to enter into the transactions with a director, an executive or a related person provided that
such transactions consist of the same commercial terms as those an ordinary person would agree with any
unrelated counterparty under the similar circumstances, on the basis of commercial negotiation and
without any dependent interest resulted from the status of the director, executive or related person. Details
are as follows :
1. Purchase of Goods
The Company and its subsidiaries have purchased the goods from the related companies which are
related by having the same directors and/ or the same group of shareholders. In this regard, the said
purchase of goods is in line with normal business conditions and treated in the same manner as other
unrelated businesses, and bases on the market price.
2. Use of Service
The Company and its subsidiaries have obtained the legal consulting service from Siam City Law Offices
Co., Ltd. which is the business having the co-directors. In this regard, the said service transaction is
as specified in agreement and is on a reasonable basis for the Company and its subsidiaries.
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3. Sale of Goods
The Company and its subsidiaries have sold the goods to the directors and the executive under the
normal business conditions and treated in the same manner as other unrelated persons in the similar
circumstance, and based on the market price.
In addition, the acquisition of intangible asset, namely software licenses, the development in efficiency of
such software, and the use of services, namely the use of software license, trademarks and consultant
services in relation to own brand development, management services and technical assistance in auction
purchasing and maintenance services for application software from both local and overseas affiliated
companies, which are the companies of SHV Group. Such transactions are as specified in agreements
and are on a reasonable basis for the Company and its subsidiaries.
5. Corporate Governance
5.1 Rights of Shareholders
(1) The Board of Directors established a policy regarding corporate governance which has recognised
the importance of the rights of shareholders including the preservation of the fundamental right to
be received by the shareholders, the equitable treatment with transparency and fairness under the
legislative and regulatory framework as well as the code of business conduct and the appropriate
and efficient management for creation of the most effect to the Company’s shareholders.
(2) The Company emphasises and respects the Rights of Shareholders by complying with the criteria
prescribed by the law. In 2008 there was Annual General Shareholders’ Meeting, dated 29 April
2008 held at Monthathip Room, Radisson Hotel, No. 92, Rama 9 Road, Bangkapi Subdistrict,
Huay Kwang District, Bangkok. For the year 2009 the Company allowed minority shareholders to
propose additional agenda in advance before the 2009 Annual General Shareholders’ Meeting and
to nominate the suitable and qualified persons to be considered for selection as directors of the
Company in advance during 26 December 2008 to 26 January 2009. Details and criteria were
posted on the Company's website www.siammakro.co.th. and also notified to the shareholders
through the online news system of the Stock Exchange of Thailand.
(3) The Company has authorised Thailand Securities Depository Co., Ltd., the Company’s Share
Registrar as the Share Registrar, to send the meeting invitation notice for the 2008 Annual General
Shareholders’ Meeting together with the supporting information of the meeting agenda to the
shareholders in advance of 17 days. The Board of Directors’ opinions were completely provided in
each agenda of the meeting notice.
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(4) The Company promulgated the meeting notices on the Company’s website www.siammakro.co.th
prior to the 2008 Annual General Shareholders’ Meeting date in advance of 35 days and also
notified through the online news system of the Stock Exchange of Thailand on the promulgation of
such meeting notices on the Company’s website. The minutes of meeting was promulgated on
such website after 13 days from the meeting date.
(5) The 2008 Annual General Shareholders’ Meeting was attended by the Company’s 9 directors including
the Audit Committee. The Company’s auditor and legal counselor were also attended the said
meeting. The Chairman of the meeting declared to the meeting the number/ proportion of
shareholders and proxy holders attending the meeting, the voting practice and counting methods
from the commencement of the meeting proceeding and the voting arrangement according to the
numerical order of the agenda described in the meeting notice. There was no other agenda than
those specified in the meeting notices (no other agenda). The meeting was proceeded with pursuant
to the Articles of Association and correctly and completely recorded in order to be examined by the
shareholders. The Company provided an equal chance to the shareholders to make any inquiry,
and express their opinions according to the agenda of the meeting and the matters proposed. The
Company also completed answered all the questions raised at the Shareholder’s meeting.
(6) The shareholders attending the meeting after the commencement of the meeting are entitled to
vote in the agenda for which the matters are being considered and the resolution has not yet been voted.
5.2 Equitable Treatment of Shareholders
(1) For the year 2009 the Company allowed minority shareholders to propose additional agenda in
advance before the 2009 Annual General Shareholders' Meeting and to nominate the suitable and
qualified persons to be considered for selection as directors of the Company in advance during 26
December 2008 to 26 January 2009. Details and criteria were posted on the Company's website
www.siammakro.co.th. and also notified to the shareholders through the online news system of the
Stock Exchange of Thailand.
(2) The meeting notices have already been delivered together with all the supporting documents to the
meeting's agenda. The Company has also supported the shareholders to use the proxy forms to
enable the shareholders to determine its direction to vote and to be entitled to vote for election of
an individual director in the agenda on appointment of directors.
(3) The shareholders may appoint any other person or the Company’s independent directors as proxy
holders to attend the meeting. The Company proposes the shareholders to appoint independent
directors who are the Audit Committee Members as the said proxy holders. The explanations and
details of the Audit Committee are provided in the meeting notices. In this regard, in the Annual
General Shareholders’ Meeting for the year 2008, there were 41 shareholders appointing the
Chairman of the Audit Committee and the member of the Audit Committee who were the independent
directors proposed by the Company as their proxy holders to vote at the meeting. In addition, the
Company equally facilitated and treated the shareholders in such shareholders' meeting.
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(4) The Company provides rules and announcements notified regularly to the management, the officers
and the relevant persons on the Company’s principle regarding legal conduct and business ethics
applied both within the Company and to the third persons especially on the keep of confidentiality
and the protection of use of inside information. The details of which are provided in the topic on
Supervision on Insider Trading on page 55.
5.3 Role of stakeholders
(1) The Company emphasises on the right of every group of stakeholders. The Company shall comply
with the provisions of the law in order to maintain the right of any group of stakeholders and to
properly coordinate the joint benefit as follows;
Shareholders : The Company will transparently operate the business and be willful to constantly
build the long-term growth and good remuneration to the shareholders.
Customers : The Company intends to continuously seek and increase the variety of
products and services to be consistent with the customers’ need for their
highest satisfaction and increase of their trust and to supervise the
quality of the products and services as well as to regularly import the
services’ standard.
Employees : The Company has had a policy regarding the Occupational Safety and
Workplace Environmental Management and then set up the Occupational
Safety and Working Environmental Section comprising the Committee of
Occupational Safety and Working Environmental, the Occupational
Safety Officer at Supervisory Level, and the Occupational Safety Officer
at Executive Level. The Company has adequately and appropriately
proceeded with the Occupational Safety and Workplace Environmental
Procedures in order to be saved from the loss of lives, the injury from
accidents and the illnesses related to work performance. The Company
also emphasises on the human resource's training and development for
their opportunity to grown in the career by cooperating with the Institute
for Skill Development, Ministry of Labour for providing the training and
the skill upgrade of the employees in every level to become the
outstanding, qualified and efficient employees and be ready for working
promotion to the higher level. Moreover, the Company also has a policy
to pay the remuneration based on the job value and work performance
including the fair welfare to the employees. The remuneration and the
welfare of the Company will be at the same or the higher level than those
of the labour market of the same industry.
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Trading Partners and : The Company intends to equally treat the trading parties and adhere to
Creditors the fundamental of fairness in considering the parties’ joint benefit and the
compliance with the parties’ mutual agreement. In addition, the Company
has strictly complied with the agreements made with all creditors and
also paid the debts under the terms and conditions specified in the
said agreements.
Competitors : The Company operates the business under the framework of international
competition rules and the laws relating to trade competition practice
principle. It does not commit any confidential infringement or any
fraudulent acquisition of competitors’ trade secret. It also does not
destroy competitors with any dishonest method. In this regard, in the past
year, the Company did not have any disputes regarding matters with
respect to the trade competitors.
Society and Environment : The Company realizes on the importance of the society and environment
where we live. The Company, then, promotes every store to always be
jointly responsible for the society by cooperating in any activity of the
community and any public activities including developing the education,
society and environment. Moreover, the Company has determined a
policy for energy conservation as a guideline for energy operation and to
promote the efficiency consumption of energy for the highest benefit
which will assist in reducing global warming crisis.
(2) The Company provided any channel to employees and/ or any person to be able to notify sources
or matters regarding the performance or non-performance under the Company’s policy or the
business ethic to the responsible person directly and safety.
5.4 Disclosure and Transparency
(1) In addition to disclosing information as specified in relevant regulations through the channel of the
Stock Exchange of Thailand, Annual Statements (Form 56-1) and Annual Report, the Company
discloses information both in Thai and English via other channel such as the Company’s website,
the information of which is regularly updated.
(2) Regarding the relationship with the investors, the Board of Directors emphasizes the transparent,
accurate and complete disclosure of information to the investors, both shareholders and related
parties by authorising the Finance Director to communicate with the institution investors, the
shareholders, the general analysts and the relevant authorities. Moreover, the Company regularly
organises the investors and the analysts meeting once of every quarter after the disclosure of the
operating results to the Stock Exchange of Thailand.
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(3) The Board of Directors provides the Report of the Board of Directors’ Responsibilities for Financial
Statements as exhibited on page 68 together with the Auditor’s Report in the Annual Report.
(4) Details on the disclosure of roles, duties and responsibilities of the Board of Directors of the Company,
the Executive Board, the Audit Committee and the Nomination and Remuneration Committee,
the directors’ terms, the Board of Directors’ meetings and the policy on payment of the remuneration
to directors and the executives are described in item 5.5 ‘Responsibilities of the Board’.
5.5 Responsibilities of the Board
(1) Board Structure
(1.1) The Board of Directors is consisted of 11 directors, which numbers are suitable for the business
size, having the Chairman being an independent director with no relationship with any
Executive and is not the Managing Director in order to separate the duties to determine the
governance policy and the management’s routine work. There is the balance of power for the
Non-Executive Directors as follows:
a) Executive Directors (the authorised signatory) 4 persons
b) Executive Director (not the authorised signatory) 1 person
c) Non-Executive Directors 6 persons
d) Independent Directors being Non-Audit Committee 3 persons
e) Independent Directors being Audit Committee 3 persons
The Board of Directors opined that 6 Independent Directors (including the Chairman of the Board)
being 54.55 percent of all directors qualified under the definition on page 43. In this regards,
the Board of Directors, having opined that Mr. Athaporn Khaimarn, an independent director having
accounting and financial knowledge, appointed him to be Chairman of the Audit Committee.
(1.2) The Board of Directors has appointed Miss Nilobon Tangprasit as the Company Secretary.
The details of which are described in the topic on 'Company Secretary’ on page 39.
(1.3) For the efficiency of directors’ performances, each director of the Company has strictly complied
with the rule on acting as a director of the listed companies not exceeding 5 companies.
(2) Committees
The Broad of Directors has appointed the Committees to assist in the Company's corporate
governance as follows:
(2.1) Audit Committee consisting of 3 independent directors being Mr. Athaporn Khaimarn, Chairman
of the Audit Committee, Mr. Chavalit Uttasart and Mr. Thira Wipuchanin, the Audit Committee
Members. There is the Senior Division Manager - Internal Audit being the Audit Committee
Secretary. The additional details of which are described in the topics on the ‘Audit Committee
Report’ on page 7 and on the ‘Audit Committee’ on page 41.
(2.2) Nomination and Remuneration Committee is described in the topic on ‘Nomination and
Remuneration Committee’ on page 42.
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(3) Roles and Responsibilities of the Board of Directors
(3.1) The Board of Directors established a policy on Corporate Governance with an intention to
perform its duties in accordance with the said principle. In this regard, the Company’s
operational policy and direction as well as the supervision of the Management was
implemented to effectively proceeded with the said policy for the highest of the Company and
the shareholders as well as for the transparency and fairness to the shareholders within the
legal framework and the business ethic. Moreover, the Board of Directors emphasises the
Company’s internal control and audit systems.
(3.2) The Company’s Board of Directors participates in the determination of the Company’s visions,
business plans and budgets and the supervision of the Management’s operation to ensure
efficient and effective implementation of the business plans and budgets in order to optimise
economic value to the business and stability to its shareholders. Roles, duties and
responsibilities of the Board of Directors, Executive Board, Audit Committee and Nomination
and Remuneration Committee are described in topic on ‘Management Structure’ on page 39.
The Board of Directors also approves financial transactions with respect to investment of the
Company other than those required approval of shareholders pursuant to regulations of the
SEC, SET and the Public Limited Companies Act B.E. 2535.
(3.3) With respect to the term of service of the Board of Directors, the Company arranges the rotation
retirement of one third of directors at each of an annual general meeting held by the Company.
In this regard, the director in charge for the longest period of time shall be terminated. The
director retired by rotation is able to be reelected his position.
(3.4) The Business Ethics Guideline was established by the Company for strict compliance by the
management and employees to ensure that they conduct their duties to the Company,
interested parties, the public and society in an honest, just and unprejudiced manner. The
Company closely monitors the performance compliance with the Business Ethics and
disciplinary actions imposed against any violators.
(3.5) Transactions with potential conflict of interest have been described in topic ‘Related Transactions
with the Conflict of Interested Persons’ on page 56. Such transactions are disclosed in the notes
to quarterly and annual financial statements under ‘Related Party Transactions’. The financial
statements have been reviewed by the Audit Committee and approved by the Board of Directors.
(3.6) Transactions falling under the category of the Company’s interconnected transactions must
be reviewed and approved by the Board of Directors and must be in compliance with
relevant SEC and SET regulations.
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(3.7) The Board of Directors emphasises an importance of the efficient system of internal control
both at the management level and at the operational level. Therefore, it prescribed duties and
operational authorities of the employees and Management in writing, and monitors the use of
the Company’s properties to be the highest benefit. It also separates duties of the operators,
and the supervisors monitoring and evaluating the operators to properly create the balancing
and the examination between each other. In addition, the Company has an internal control on
the financial system by providing the financial report system to be presented to the
responsible Management. Moreover, the Company has an internal audit to be ensured that
the performance of the main operation and the Company’s important financial transactions
have efficiently been implemented pursuant to the prescribed guideline. The Internal Audit
Division directly reports to the Audit Committee.
(3.8) The Company’s Board of Directors emphasises the great importance to the risk management
and determines as well as evaluates the risk of the Company’s business operation. The
Company provides a questionnaire on the risk management of each side of the business
operation. The management of each department is an evaluator of the risk and the external
auditor reviews the questionnaire having been answered by the said management whether or
not the answer is correct. In addition, the preventive measure and the management of the
risk including the risk effecting to the Company’s operation are prescribed to guarantee the
stability of the Company’s existence.
(4) Board of Directors’ Meetings
The Board of Directors’ Meetings are regularly held every 3 month. The extra meetings are also
held as necessary. The agenda of the meetings are clearly specified in advance. The agenda on
considering the report of the Audit Committee and the financial statements are provided regularly.
In this regard, the Company arranges for the notice of meeting together with agendas for the
meeting and other documents to be delivered to the Board of Directors in advance of 7 days to
enable the Board of Directors to have enough time to review the information before the meeting. In
the year 2008, the Board of Directors had totaling 8 Board of Directors’ Meetings on the ordinary
and extra meetings. A summary of the attendance of the Board of Directors’ meeting of each
director was as follows:
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Name Position Term of Service Number of Attendance
1. Mr. Dhanin Chearavanont Independent Director April 2008 - April 2011 �
and Honorary Chairman
2. Mr. Arsa Sarasin Independent Director April 2008 - April 2011 7
and Chairman
3. Mrs. Suchada Ithijarukul Vice Chairman April 2007 - April 2009 8
4. Mr. Dennis Casey Director June 2006 - April 2009 6
5. Mr. Prasert Jarupanich Director April 2008 - April 2011 8
6. Mr. Ruurd Jacobus Faber Director April 2006 - April 2009 7
7. Mrs. Saowaluck Thithapant Director April 2006 - April 2009 8
8. Mr. Edwin Adriaan Leijnse Director 3
(Resigned in interval)
Mr. Stephan Ronald Nanninga* Director August 2008 - April 2010 -
(Substituted)
9. Mr. Athaporn Khaimarn Independent Director April 2007 - April 2010 7
and Chairman of the
Audit Committee
10. Mr. Chavalit Uttasart Independent Director April 2008 - April 2010 6
and Member of the
Audit Committee
11. Mr. Thira Wipuchanin Independent Director April 2007 - April 2010 8
and Member of the
Audit Committee
Remarks :
* Substituted the director who resigned during the year according to the resolution of the Board of
Directors’ Meeting No. 6/2008 dated 7 August 2008.
The Minutes of all the meetings were recorded in writing, certified by the Board of Directors and
kept to be ready for inspection by the Board of Directors or other related parties.
Furthermore, in the year 2008, the Company’s Audit Committee comprised of three independent
directors has attended the non-management meeting with the external auditors.
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(5) Board of Directors Self Assessment
The Board of Directors has arranged the self assessment of their performances at least once a year.
The Board of Directors collaboratively evaluates the performances and problems so as to reflect the
performance efficiency and to subsequently seek the direction for improvement and solutions.
(6) Remuneration for Directors and the Management
a) Directors' Remuneration
The Company has clearly and transparently determined the directors’ remuneration to be
consistent with and suitable to the Company’s operation and responsibilities by comparing with
remuneration levels of other companies in the same industrial fields. The said remuneration
shall be approved by the shareholders’ meeting.
b) Management's Remuneration
The Company has determined the Management’s remuneration in compliance with the principle
and policy of the Company in considering the Company’s operating result and the performance
of each individual Management.
c) Remuneration of the Directors and Management in 2008
Details have been described in the topic on ‘Remuneration of the Executives in 2008’ on page 53.
(7) Board of Directors and the Management Training
The Board of Directors has realised the importance of the training of Directors and the Management in
respect of the Good Corporate Governance and then attended the seminars and the training courses
held by the Thai Institute of Directors. In addition, the Company has invited the outsiders specialising
on the Good Corporate Governance to provide lectures to the Company’s directors in order to
continuously improve their performances and apply the acquired knowledge to the Company.
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6. Auditors’ Remuneration in 2008
Audit fee
The Company and its subsidiaries paid audit fee to the audit firm; namely, PricewaterhouseCoopers ABAS
Ltd. for the fiscal year 2008 as the following details.
Remark : * Excluding the remuneration in the case of the auditors attending the observation on the stock
count during the year at each branch of the Company and its subsidiaries of Baht 851,839.
Non-audit fee
The Company paid non-audit fee i.e. risk assessment and special purpose audit engagement to the audit
firm; namely, PricewaterhouseCoopers ABAS Ltd. for the fiscal year 2008 as the following details.
Company Non Audit Service Service Providers Paid Contingent
(Baht) Expenses
(Baht)
Siam Makro Plc. Risk Assessment Pricewaterhouse 190,000 -
Coopers ABAS Ltd.
Siam Makro Plc. Special Purpose Audit Pricewaterhouse 100,000 -
Engagement** Coopers ABAS Ltd.
Total 290,000 -
Company Audit Firm Audit Fee (Baht)
Siam Makro Plc. PricewaterhouseCoopers ABAS Ltd. 4,150,000*
Subsidiary Companies PricewaterhouseCoopers ABAS Ltd. 924,615*
Remark : ** The review of the interim financial statements of Makro Office Centre Co., Ltd., being sold
during the year, for the period ended 31 May 2008 in order to use in preparation of the
consolidated financial statements of Siam Makro Public Company Limited for the year ended
31 December 2008.
OTHER INFORMATION
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The Board of Directors of Siam Makro Public Company Limited has provided the financial statements showing
the Company’s financial status and business operation result for the year 2008 under the Public Company Act
B.E. 2535 (A.D. 1992) and Rules and Regulations of the Stock Exchange of Thailand. The Board of Directors is
responsible for the consolidated and company financial statements presented in this annual report. The Board of
Directors confirms that the aforementioned financial statements are in accordance with Thai Generally Accepted
Accounting Principles, using appropriate accounting policy consistently employed by the Company as well as
applying careful judgement and best estimation. Important information is adequately disclosed in the notes to
financial statements.
The Board of Directors has provided and maintained an efficient internal control system to ensure that accounting
records are accurate, complete and adequate to protect its assets and uncover weaknesses in order to prevent
fraud or materially irregular operations.
The Board of Directors has appointed an Audit Committee, which consists of Independent Directors responsible
for the quality of financial statements, internal control system and law compliance, whose comments on these
issues are readily included in the Audit Committee Report in this annual report.
The Board of Directors is of opinion that the Company’s overall internal control system has functioned up to the
satisfactory level and rendered credibility and reliability to the consolidated and company financial statements for
the year ended December 31, 2008.
Mr. Arsa Sarasin Mrs. Suchada Ithijarukul
Chairman President
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Consolidated and Company
Financial Statements
31 December 2008
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AUDITOR'S REPORT
To the Shareholders of Siam Makro Public Company Limited
I have audited the accompanying consolidated and Company balance sheets as at 31 December 2008 and 2007,
and the related consolidated and Company statements of income, changes in shareholders’ equity and cash
flows for the years then ended of Siam Makro Public Company Limited and its subsidiaries, and of Siam Makro
Public Company Limited, respectively. The Company’s management is responsible for the correctness and
completeness of information in these financial statements. My responsibility is to express an opinion on these
financial 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 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the consolidated and Company financial statements referred to above present fairly, in all material
respects, the consolidated and Company financial positions as at 31 December 2008 and 2007, and the
consolidated and Company results of operations, and cash flows for the years then ended of Siam Makro Public
Company Limited and its subsidiaries, and of Siam Makro Public Company Limited, respectively, in accordance
with generally accepted accounting principles.
Somchai Jinnovart
Certified Public Accountant (Thailand) No. 3271
PricewaterhouseCoopers ABAS Limited
Bangkok
19 February 2009
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Notes Baht Baht Baht Baht
ASSETS
Current Assets
Cash and cash equivalents 7 1,925,384,599 1,564,115,221 1,824,243,596 1,367,030,846
Trade accounts receivable, net 8 151,089,270 183,869,091 58,477,103 20,186,641
Advances and short-term loans
to related parties 9.4 - 769 136,197,723 127,407,875
Current portion of long-term loan
to a related party 9.4 - - 100,000,000 -
Inventories, net 10 5,617,378,024 5,486,288,454 5,410,348,561 5,108,736,446
Purchase discounts receivable 459,857,630 590,792,559 459,857,630 577,016,716
Current portion of leasehold right 15 30,104,241 31,686,446 30,104,241 30,104,241
Other current assets, net 9.5, 11 550,681,519 632,655,602 667,140,402 743,409,663
Total Current Assets 8,734,495,283 8,489,408,142 8,686,369,256 7,973,892,428
Non-Current Assets
Investments in subsidiaries 12 - - 945,405,679 1,145,405,679
Long-term loan
to a related party 9.4 - - - 100,000,000
Property, plant and
equipment, net 13 11,035,245,386 11,266,342,053 8,224,994,689 8,359,201,999
Land held for sale
or future development, net 14 135,500,000 135,500,000 135,500,000 135,500,000
Leasehold right, net 15 562,919,371 615,675,076 562,919,371 593,023,612
Goodwill, net 16 167,384,412 167,384,412 - -
Other intangible assets, net 17 38,837,663 41,620,472 38,377,520 34,552,572
Deposits 9.6 11,926,845 43,725,207 156,699,760 155,900,210
Total Non-Current Assets 11,951,813,677 12,270,247,220 10,063,897,019 10,523,584,072
Total Assets 20,686,308,960 20,759,655,362 18,750,266,275 18,497,476,500
The notes to the consolidated and Company financial statements form an integral part of these financial statements.
BALANCE SHEETSAs at 31 December 2008 and 2007
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2008 2007 2008 2007
Notes Baht Baht Baht Baht
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term loans from
financial institutions 18 1,214,752,257 564,851,424 1,150,000,000 495,000,000
Trade accounts payable
Third parties 9,663,405,198 10,199,406,884 9,613,231,236 9,898,868,358
Related parties 9.3 - - 17,443,365 24,300,994
Total trade accounts payable 9,663,405,198 10,199,406,884 9,630,674,601 9,923,169,352
Advances from related parties 9.7 69,881,377 71,087,744 70,693,404 68,219,649
Other current liabilities
Non-trade accounts payable 236,005,270 558,838,135 229,107,970 538,278,638
Income tax payable 306,255,588 210,185,942 268,250,277 161,052,924
Accrued expenses 435,774,374 544,081,142 427,637,684 522,359,348
Others 84,544,330 184,735,661 83,272,311 176,007,987
Total Current Liabilities 12,010,618,394 12,333,186,932 11,859,636,247 11,884,087,898
Non-Current Liabilities
Provision for employee benefits 19 108,075,576 92,224,456 107,685,993 90,409,289
Other liabilities 9.8 39,590,273 40,342,761 32,492,213 33,822,502
Total Non-Current Liabilities 147,665,849 132,567,217 140,178,206 124,231,791
Total Liabilities 12,158,284,243 12,465,754,149 11,999,814,453 12,008,319,689
Shareholders’ Equity
Share capital 21
Authorised share capital 2,400,000,000 2,400,000,000 2,400,000,000 2,400,000,000
Issued and paid-up share capital 2,400,000,000 2,400,000,000 2,400,000,000 2,400,000,000
Premium on share capital 3,290,152,068 3,290,152,068 3,290,152,068 3,290,152,068
Retained earnings
Appropriated Legal reserve 22 240,000,000 240,000,000 240,000,000 240,000,000
Unappropriated 2,597,872,649 2,363,749,145 820,299,754 559,004,743
Total Shareholders’ Equity 8,528,024,717 8,293,901,213 6,750,451,822 6,489,156,811
Total Liabilities and
Shareholders’ Equity 20,686,308,960 20,759,655,362 18,750,266,275 18,497,476,500
The notes to the consolidated and Company financial statements form an integral part of these financial statements.
BALANCE SHEETSAs at 31 December 2008 and 2007
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Notes Baht Baht Baht Baht
Revenues
Sales 9.1 72,139,399,240 62,099,439,749 70,789,668,839 59,908,936,826
Service income 9.1 1,477,566,617 1,490,989,367 1,434,865,760 1,414,630,024
Other income 9.1, 23 693,315,423 343,771,031 955,036,338 574,968,905
Total revenues 74,310,281,280 63,934,200,147 73,179,570,937 61,898,535,755
Expenses
Cost of sales 9.2 67,286,012,791 57,916,722,012 66,189,698,454 56,156,626,938
Selling and
administrative expenses 9.2, 24 4,535,261,259 4,167,878,708 4,579,202,284 4,002,717,889
Directors’ remuneration 11,880,000 11,834,667 11,880,000 11,834,667
Total expenses 71,833,154,050 62,096,435,387 70,780,780,738 60,171,179,494
Profit before interest expense
and income tax 2,477,127,230 1,837,764,760 2,398,790,199 1,727,356,261
Interest expense (32,874,236) (5,022,547) (31,436,452) (4,016,900)
Income tax (770,129,490) (541,140,347) (666,058,736) (430,555,453)
Net profit for the year 1,674,123,504 1,291,601,866 1,701,295,011 1,292,783,908
Basic earnings per share 25
Net profit for the year 6.98 5.38 7.09 5.39
The notes to the consolidated and Company financial statements form an integral part of these financial statements.
STATEMENTS OF INCOMEFor the years ended 31 December 2008 and 2007
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Issued
and paid-up Premium on Retained
share capital share capital earnings Total
Notes Baht Baht Baht Baht
2007
Opening balance 2,400,000,000 3,290,152,068 3,052,147,279 8,742,299,347
Net profit for the year - - 1,291,601,866 1,291,601,866
Dividends 26 - - (1,740,000,000) (1,740,000,000)
Closing balance 2,400,000,000 3,290,152,068 2,603,749,145 8,293,901,213
2008
Opening balance 2,400,000,000 3,290,152,068 2,603,749,145 8,293,901,213
Net profit for the year - - 1,674,123,504 1,674,123,504
Dividends 26 - - (1,440,000,000) (1,440,000,000)
Closing balance 2,400,000,000 3,290,152,068 2,837,872,649 8,528,024,717
Company
Issued
and paid-up Premium on Retained
share capital share capital earnings Total
Baht Baht Baht Baht
2007
Opening balance 2,400,000,000 3,290,152,068 1,246,220,835 6,936,372,903
Net profit for the year - - 1,292,783,908 1,292,783,908
Dividends 26 - - (1,740,000,000) (1,740,000,000)
Closing balance 2,400,000,000 3,290,152,068 799,004,743 6,489,156,811
2008
Opening balance 2,400,000,000 3,290,152,068 799,004,743 6,489,156,811
Net profit for the year - - 1,701,295,011 1,701,295,011
Dividends 26 - - (1,440,000,000) (1,440,000,000)
Closing balance 2,400,000,000 3,290,152,068 1,060,299,754 6,750,451,822
The notes to the consolidated and Company financial statements form an integral part of these financial statements.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYFor the years ended 31 December 2008 and 2007
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2008 2007 2008 2007
Notes Baht Baht Baht Baht
Cash flows from operating activities
Profit before income tax 2,444,252,994 1,832,742,213 2,367,353,747 1,723,339,361
Adjustments for:
Depreciation and amortisation 13, 15, 17 883,784,857 683,409,258 860,554,470 628,481,851
Interest income (14,366,280) (60,882,447) (22,743,730) (69,155,859)
Interest expense 32,874,236 5,022,547 31,436,452 4,016,900
(Gain) loss on disposal of
property, plant and equipment (108,125,376) 1,237,423 (107,596,824) (2,060,326)
Dividends received from
related parties 12, 23 - - (233,499,817) (234,999,928)
Gain on sale of investment
in a subsidiary 12, 13 (168,745,208) - (196,147,769) -
Allowance for loss from
disposal of building 2,392,981 - 2,392,981 -
Allowance for obsolete and
shrinkage inventories 10 37,297,817 25,138,120 35,594,609 23,041,969
Provision for employee benefits 19 26,185,494 22,060,638 25,838,701 20,999,671
Others (1,728,833) (4,608,195) (2,740,038) (2,021,099)
Changes in operating assets and liabilities
Trade accounts receivable (1,274,892) 22,529,989 (38,290,461) 13,682,374
Advances to related parties (82,738) 157,744 1,538,659 (571,077)
Inventories (362,182,380) (1,311,416,295) (337,206,724) (1,243,635,109)
Purchase discounts receivable 124,971,602 (239,940,943) 117,159,086 (239,835,341)
Other current assets 66,690,247 (338,131,426) 71,991,511 (347,528,655)
Trade accounts payable - third parties (278,791,357) 927,057,541 (285,637,122) 926,037,120
Trade accounts payable - related parties - - (6,857,629) 12,669,218
Advances from related parties 2,002,609 2,396,154 2,473,755 3,035,444
Non-trade accounts payable 11,084,843 45,035,769 8,191,749 41,533,663
Accrued expenses (96,678,188) 201,820,885 (98,308,560) 200,926,276
Other current liabilities (90,276,083) 74,977,800 (95,128,659) 77,609,883
Provision for employee benefits 19 (8,561,997) (5,698,082) (8,561,997) (5,547,627)
Cash generated from operating activities 2,500,724,348 1,882,908,693 2,091,806,390 1,530,018,709
Interest received 14,301,138 61,994,961 22,433,012 70,624,517
Interest paid (29,291,896) (4,512,849) (27,849,556) (3,503,727)
Income tax paid (669,416,626) (560,777,704) (558,861,384) (481,982,960)
Net cash generated from
operating activities 1,816,316,964 1,379,613,101 1,527,528,462 1,115,156,539
The notes to the consolidated and Company financial statements form an integral part of these financial statements.
STATEMENTS OF CASH FLOWSFor the years ended 31 December 2008 and 2007
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Cash flows from investing activities
Purchase of property, plant and equipment (1,126,239,675) (3,428,995,554) (1,109,401,774) (3,393,368,931)
Purchase of other intangible assets (12,720,614) (16,866,626) (12,720,614) (13,537,726)
Net cash received from disposals
of investment in a subsidiary 12 258,599,211 - 396,147,769 -
Cash received from disposals of
property, plant and equipment 216,714,214 4,127,540 212,288,928 2,984,644
Dividends received
from a related party - - 240,499,817 108,999,928
Payments of short-term loans
from a related party 9.4 - - (10,000,000) (20,000,000)
Repayments long-term loan
from a related party 9.4 - - - 74,000,000
Net deposits received (1,301,555) (5,461,861) (2,129,838) (2,112,696)
Net cash used in investing activities (664,948,419) (3,447,196,501) (285,315,712) (3,243,034,781)
Cash flows from financing activities
Short-term loans from financial institutions 649,900,833 500,301,896 655,000,000 495,000,000
Dividends paid to shareholders 26 (1,440,000,000) (1,740,000,000) (1,440,000,000) (1,740,000,000)
Net cash used in financing activities (790,099,167) (1,239,698,104) (785,000,000) (1,245,000,000)
Net increase (decrease) in cash
and cash equivalents 361,269,378 (3,307,281,504) 457,212,750 (3,372,878,242)
Cash and cash equivalents,
opening balance 1,564,115,221 4,871,396,725 1,367,030,846 4,739,909,088
Cash and cash equivalents,
closing balance 1,925,384,599 1,564,115,221 1,824,243,596 1,367,030,846
Non cash transactions
Investing activities:
Purchase of property,
plant and equipment unpaid 32,817,339 363,773,647 32,358,769 356,599,398
Purchase of other
intangible assets unpaid 8,931,132 2,052,920 8,931,132 2,052,920
The notes to the consolidated and Company financial statements form an integral part of these financial statements.
STATEMENTS OF CASH FLOWS (CONTINUED)For the years ended 31 December 2008 and 2007
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1 General information
Siam Makro Public Company Limited was incorporated in Thailand on 10 May 1988, changed its status to a
public company on 11 February 1994 and was subsequently listed on the Stock Exchange of Thailand on
11 August 1994.
The Company’s principal business is the operation of Cash and Carry Trade Centres throughout Thailand,
under the name “Makro”, selling food and non-food products to registered members, predominantly small and
medium size businesses, retailers, caterers, professional and service sectors and institutions.
The Company has three subsidiaries - Makro Office Centre Company Limited, Siam Food Services Limited
and Makro Properties Limited which operate businesses as follows: Makro Office Centre Company Limited is
a specialised retailing operation, a category killer supplying office supplies, office automation products and
office services such as copying and printing, on a self service, mail order and delivery basis, Siam Food
Services Limited is an importing and trading frozen foods company and providing services such as freight,
delivery, rental and storage and Makro Properties Limited is a land investment company, purchasing the land
and lease them to Makro stores. Nevertheless, during 2008, the Company sold investment in a subsidiary,
Makro Office Centre Company Limited and transferred its share on 1 June 2008.
The registered office of the Company is located at 3498 2nd Floor, Lard Prao Road, Klongchan, Bangkapi,
Bangkok 10240.
The consolidated and Company financial statements have been approved for issue by the board of directors
on 19 February 2009.
2 Accounting policies
The principal accounting policies adopted in the preparation of these consolidated and Company financial
statements are set out below.
2.1 Basis of preparation
The consolidated and Company financial statements have been prepared in accordance with Thai
generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai
Accounting Standards issued under the Account Profession Act B.E. 2547, and the financial
reporting requirements by the Securities and Exchange Commission under the Securities and Exchange
Act., B.E 2535.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
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eport 2008
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eport 2008
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2 Accounting policies (Cont’d)
2.1 Basis of preparation (Cont’d)
The consolidated and Company financial statements have been prepared under the historical cost
convention.
The preparation of financial statements in conformity with Thai generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported periods. Although these estimates are
based on management’s best knowledge of current events and actions, actual results may differ from
those estimates.
Certain amounts in the comparative figures were reclassified to conform to the current year
classifications, with no effect on previously reported net earnings or shareholders' equity.
An English version of the consolidated and Company financial statements has been prepared from the
statutory financial statements that are in the Thai language. In the event of a conflict or a difference in
interpretation between the two languages, the Thai language statutory financial statements shall prevail.
2.2 New accounting standard and amendments to accounting standards
During 2007 and 2008, the Federation of Accounting Professions ("FAP") has announced new standard
and amendments to Thai Accounting Standard ("TAS") as follows:
Revised standards
TAS 25 Cash Flow Statements
TAS 29 Leases
TAS 31 Inventories
TAS 33 Borrowing Costs
TAS 35 Presentation of Financial Statements
TAS 39 Accounting Policies, Changes in Accounting Estimates and Errors
TAS 41 Interim Financial Reporting
TAS 43 Business Combinations
TAS 49 Construction Contracts
New standard
TAS 51 Intangible Assets
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
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008
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008
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eport 2008
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eport 2008
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eport 2008
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eport 2008
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eport 2008
2 Accounting policies (Cont’d)
2.2 New accounting standard and amendments to accounting standards (Cont’d)
The amendments to accounting standards and the new accounting standard are effective for the period
beginning on or after 1 January 2008, except TAS 29 (revised 2007) "Leases" which is effective for the
lease contract started on or after 1 January 2008.
The Company's management determined that the revised standards and new standard will not have
significant impact on the financial statements being presented, except;
TAS 35 (revised 2007) : "Presentation of Financial Statements" requires disclosure of additional
information in relation to critical accounting estimate, management's judgements and capital risk
management as discussed in Note 4 and 5, respectively.
TAS 43 (revised 2007) : "Business Combinations" requires no amortisation of goodwill from business
combination, but to review the impairment of goodwill annually instead. The change in accounting policy
will be applied prospectively. The Company ceases to amortise goodwill since 1 January 2008.
The revised accounting standards that are effective for the period beginning on or after 1 January 2009
but the Group has not adopted in the current year are;
TAS 36 Impairment of Assets
TAS 54 Non-current Assets Held for Sale and Discontinued Operations
Those accounting standards are not expected to have material impact on the financial statements being
presented.
2.3 Investments in subsidiaries
Subsidiaries are those entities in which the Group has an interest of more than one half of the voting
rights or otherwise has power to exercise control over the operations. Subsidiaries are consolidated from
the date on which control is transferred to the Group and are no longer consolidated from the date that
control ceases. All intercompany transactions and balances between group companies are eliminated.
Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the
policies adopted by the Group.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
80
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eport 2008
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eport 2008
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2 Accounting policies (Cont’d)
2.3 Investments in subsidiaries (Cont’d)
The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets
acquired is recorded as goodwill.
Investments in subsidiaries in the Company financial statements are presented by the cost method of accounting.
A list of the Group's principal subsidiaries and the effects from disposals of a subsidiary are shown in Note 12.
2.4 Foreign currency translation
Items included in the financial statements of each entity in the Group are measured using Thai Baht.
The consolidated financial statements are presented in Thai Baht.
Foreign currency transactions in the Group are accounted for at the exchange rates prevailing at the date
of the transactions. The outstanding monetary assets and liabilities denominated in foreign currencies
are translated at the exchange rate ruling at the balance sheet date. Gains and losses resulting from the
settlement of such transactions and from the translation of monetary assets and liabilities denominated in
foreign currencies are recognised in the statements of income. The Group has limited exposure to
foreign currency transactions by using forward exchange contracts and such balances are translated at
year-end exchange rates.
2.5 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short-term
highly liquid investments with original maturities not over three months, but not include deposit with bank
which held to maturities.
2.6 Trade accounts receivable
Trade accounts receivable are carried at original invoice amount and subsequent measurement is based
on the remaining amount less allowance for doubtful receivables by reviewing outstanding amounts at
the year end. The amount of the allowance is the difference between the carrying amount of the
receivable and the amount expected to be collectible. Bad debts are written off during the year in which
they are identified and recognised in the statements of income as selling and administrative expenses.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
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eport 2008
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eport 2008
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2 Accounting policies (Cont’d)
2.7 Inventories
Inventories are stated at the lower of cost or net realisable value. Cost is determined by the first-in first-
out basis. The cost of purchase comprises both the purchase price and costs directly attributable to the
acquisition of the inventory, such as import duties and transportation charges, less all attributable
discounts, allowances or rebates. Net realisable value is the estimate of the selling price in the ordinary
course of business, less the costs of completion and selling expenses. Allowance is made, where
necessary, for obsolete, slow-moving and shrinkage inventories.
2.8 Investments
The Group classifies its investments in debt securities as held-to-maturity securities. Those investments
with fixed maturity that the management has the intent and ability to hold to maturity are included in
current assets when the maturity date is less than 12 months from balance sheet date and included in
non-current assets when the maturity date is longer than 12 months.
Investments in debt securities which are classified as held-to-maturity securities are carried at amortised cost.
A test for impairment is carried out when there is a factor indicating that an investment might be impaired.
If the carrying value of the investment is higher than its recoverable amount, the impairment loss is
charged to the statements of income.
On disposal of an investment, the difference between the net disposal proceeds and the carrying amount
is charged to the statements of income.
2.9 Property, plant and equipment
All property, plant and equipment are initially recorded at cost, and are stated at cost less accumulated
depreciation.
Depreciation is calculated on the straight-line method to write-off the cost of each asset, except for land
which is considered to have an indefinite life, to its residual value over the estimated useful life as follows:
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
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008
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008
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eport 2008
82
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eport 2008
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2 Accounting policies (Cont’d)
2.9 Property, plant and equipment (Cont’d)
Leasehold improvement period of lease agreement (20 - 30 years)
Building and leasehold building 20 years
Equipment 6 years
Computer 3, 6 years
Vehicle 5 years
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written
down immediately to its recoverable amount. Estimated recoverable amount is the higher of the
anticipated discounted cash flows from the continuing use of the asset and the amount obtainable from
the sale of the asset less any costs of disposal.
Repairs and maintenance are charged to the statements of income during the financial year in which they
are incurred. The cost of major renovations is included in the carrying amount of the asset when it is
probable that future economic benefits in excess of the originally assessed standard of performance of
the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life
of the related asset.
Gains and losses on disposals of property, plant and equipment are determined by comparing proceeds
with carrying amount and are included in operating profit.
2.10 Land held for sale or future development
Land held for sale or future development is recorded at cost less allowance for impairment of assets.
2.11 Leasehold right
Leasehold right is initially recorded at cost, and are stated at cost less accumulated amortisation. The
amortisation is calculated on the straight-line method over the period of lease agreement (25 - 30 years).
2.12 Intangible assets
2.12.1 Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's
share of the net identifiable assets of the acquired subsidiaries undertaking at the date of
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
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008
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eport 2008
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2 Accounting policies (Cont’d)
2.12 Intangible assets (Cont’d)
2.12.1 Goodwill (Cont’d)
acquisition. Goodwill on acquisitions of subsidiaries is reported in the consolidated balance sheet
as an intangible asset. Goodwill is tested annually for impairment and carried at cost less
accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses
on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation
is made to those cash generating units or group of cash generating units that are expected to
benefit from the business combination in which the goodwill arose.
2.12.2 Other intangible assets
Other intangible assets represent computer software for internal use. The cost includes cost of
software development and software license fee. Other intangible assets are amortised using the
straight-line method over their estimated useful lives, which range from 3 - 6 years.
2.13 Impairment of assets
Property, plant and equipment and other non-financial assets, including land held for sale or further
development, goodwill and other intangible assets are reviewed for impairment losses whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount which
is the higher of an asset's net selling price and value in use. For the purposes of assessing impairment,
assets are grouped at the smallest level for which there is separately identifiable cash flows. Assets other
than goodwill that suffered an impairment are reversed for possible impairment loss of the estimation of the
recoverable amounts were changed in subsequent year after the Group's recognition of impairment.
2.14 Leases - where a Group company is the lessee
Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are
classified as operating leases. Payments made under operating leases (net of any incentives received from
the lessor) are charged to the statements of income on a straight-line basis over the period of the lease.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
84
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008
2008
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pany L
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eport 2008
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008
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eport 2008
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008
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eport 2008
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008
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eport 2008
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2 Accounting policies (Cont’d)
2.14 Leases - where a Group company is the lessee (Cont’d)
When an operating lease is terminated before the lease period has expired, any payment required to be
made to the lessor by way of penalty is recognised as an expense in the period in which termination
takes place.
Leases - where the Group company is the lessor
Assets leased out under operating leases are included as land in the balance sheets. Rental income (net
of any incentives given to lessee) is recognised on a straight-line basis over the lease term.
2.15 Income taxes
The Group calculates income taxes according to the Revenue Code and records them on accrual basis.
The Group does not recognise income taxes payable or receivable in future periods in respect of
temporary differences arising between the tax bases of assets and liabilities and their carrying amounts
in the financial statements.
2.16 Employee benefits
Provision for employee benefits
i) Pension fund benefit
The Group operates a pension scheme for employees who joined the Company before the 1st of
January 2003 and choose to retain the benefits of the original scheme. Employees, upon resignation
or retirement from the Company after having completed 3 years of service, shall be entitled to receive
cash payment equivalent to their prevailing salary multiplied by the number of years of service, but not
exceeding the equivalent of 10 months of final salary.
ii) Severance benefit
Under Labor Laws applicable in Thailand and Group's employment policy, all employees completing
120 days of service are entitled to severance pay on termination or retrenchment without cause or
upon retirement age of 60. The severance pay will be at the rate according to number of years of
service as stipulated in the Labor Law which is currently at a maximum rate of 300 days of final salary.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
85
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Annual Report 2
008
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eport 2008
Annual Report 2
008
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eport 2008
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2 Accounting policies (Cont’d)
2.16 Employee benefits (Cont’d)
Provision for employee benefits (Cont’d)
iii) Additional benefit related to provident fund
The Group operates an employee benefit scheme under which employees who are members of the
Group's provident fund, being a defined contribution plan, for at least 9 years are entitled to receive
additional contribution from the Group on their resignation or retirement from employment with the
Group. Employees, who are member of the provident fund for at least 9 years, shall be entitled to
receive an additional 50% of the contributions made by the Group on their behalf.
The Group recognises liabilities in respect of these defined benefit plans at the present value of the defined
benefit obligations at the balance sheet date adjusted for actuarial gains/losses. These defined benefit
obligations are calculated by independent actuaries using the projected unit credit method. The present
value of the defined benefit obligations is determined by the estimated future cash outflows using interest
rates of government bonds which have terms to maturity approximating the terms of the related liability.
Actuarial gains and losses arising from experience adjustments (the effects of differences between the
previous actuarial assumptions and what has actually occurred), changes in actuarial assumptions and
amendments to employee benefits plans are charged as expenses or credited to the statements of
income over the average remaining service lives of the related employees.
Provident fund
The Group operates a provident fund, being a defined contribution plan, the assets for which are held in a
separate trust fund. The provident fund is funded by payments from employees and by the Group. The
Group's contributions to the provident fund are charged to the statements of income in the years to which
they relate.
2.17 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result
of past events, it is probable that an outflow of resources will be required to settle the obligation, and
a reliable estimate of the amount of the obligation can be made.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
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Annual Report 2
008
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eport 2008
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86
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2 Accounting policies (Cont’d)
2.18 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and
service net of output tax, rebates and discounts, and after eliminating sales within the Group for the
consolidated financial statements. Revenue from sales of goods is recognised when significant risks and
rewards of ownership of the goods are transferred to the buyer. Revenue from rendering services is
recognised in the accounting period in which the services are rendered.
Interest income is recognised on a time proportion basis, taking account of the principal outstanding and
the effective rate over the period to maturity, when it is determined that such income will accrue to the
Group. Dividends are recognised when the right to receive payment is established.
2.19 Dividends
Dividends are recorded in the consolidated and Company's financial statements in the period when
declared by the board of directors and/or approved by the shareholders of related companies.
2.20 Segment reporting
The segmental reporting has been prepared based on the Group's method of internal reporting, which is
presented by business segment of the Group's operations.
3 Financial risk management
3.1 Financial risk factors
3.1.1 Interest rate risk
The Group encounters interest rate risk through its exposure to interest rate fluctuations on its cash
and short-term investments but such risks do not carry significant impact.
3.1.2 Foreign currency exchange risk
The Group has limited exposure to foreign currency exchange fluctuations on purchasing of goods
and services and these purchases are not significant in the ordinary course of business. The Group
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
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eport 2008
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Annual R
eport 2008
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008
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3 Financial risk management (Cont’d)
3.1 Financial risk factors (Cont’d)
3.1.2 Foreign currency exchange risk (Cont’d)
manages this risk through forward exchange contracts. Foreign currency exchange trading for
speculative purpose is prohibited.
3.1.3 Credit risk
The Group has no significant concentrations of credit risk relating to its cash, short-term investments,
trade receivables, amounts due from related parties and loans to related parties as the Group primarily
operates on cash and carry basis in which most transactions are cash sales. In addition, the Group
places its cash and short-term investments with high quality financial institutions. The Group's policies are
designed to limit exposure with any one financial institution and to invest excess cash in low risk investment
instruments. The Group has not experienced any losses on such accounts. The subsidiaries have in
place credit policies not to provide credit for any companies considered high risk of collections.
3.1.4 Liquidity risk
The Group manages its liquidity risk by holding sufficient cash and short-term investments for
operating expenses.
3.2 Accounting for financial instruments
Financial instruments carried on the balance sheet include cash and cash equivalents, short-term
investments, trade receivables and payables, amounts due from/to related parties, and loans to related
parties. The particular recognition methods adopted are disclosed in the individual policy statements
associated with each item.
Foreign currency forward contracts establish the exchange rate at which the Group will pay foreign
currency amounts on a predetermined future date. The foreign currency amount receivable under these
contracts are translated at the year end exchange rate. Unrealised gains or losses that result from the
translation are recognised in the statements of income. Any premium or discount equal to the difference
between the spot exchange rate and the forward rate arising at the inception of the contract is amortised
over the life of the contract.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
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008
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88
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008
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Annual R
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Annual Report 2
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Annual R
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3 Financial risk management (Cont’d)
3.3 Fair value
Fair values of financial instruments are accounted for at their carrying amounts because of the short
maturities of these instruments, therefore, they are not considered a significant risk in the Group's future
cash flows.
4 Critical accounting estimates, assumption and judgements
Estimates, assumption, and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the circumstances.
1 Impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable amounts of
cash-generating units have been determined based on value-in-use calculations. These calculations
require the use of management's estimates.
2 Property, plant and equipment and intangible assets
Management determines the estimated useful life and residual value for the Group's property, plant and
equipment and intangible assets. Management will revise the depreciation charge where useful life and
residual value are different to previously estimated, or it will write off or write down technically obsolete
assets or idle assets that have been abandoned or sold.
3 Employee benefits
The Group has commitment on pension fund benefit, severance benefit, additional benefit related to
provident fund. The present value of employee benefit liabilities recognised in the balance sheet is
determined on an actuarial basis utilising various assumptions. The assumptions used in determining the
net year cost for employee benefits includes discounted rate, future basis salary increase, service years,
employee turnover rate, and others. Any changes in these assumptions will impact the net periodic cost
recorded for employee benefits.
On an annual basis, the Group determines the appropriate discount rate, which represents the interest
rate that should be used to determine the present value of future cash flows currently expected to be
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
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008
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4 Critical accounting estimates, assumption and judgements (Cont’d)
3 Employee benefits (Cont’d)
required to settle the employee benefits. In determining the appropriate discount rate the Group
considers the current yields on high quality corporate fixed-income investments in Thailand.
5 Capital risk management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
6 Financial information by business segments
For the year ended 31 December 2008
Wholesale Land
and Retail Rental
Business Business Elimination Total
Million Baht Million Baht Million Baht Million Baht
Sales 72,279 - (140) 72,139
Other income
- Third parties 2,163 8 - 2,171
- Related parties 15 304 (319) -
2,178 312 (319) 2,171
Total revenues 74,457 312 (459) 74,310
Profit from operation 2,175 309 (7) 2,477
Interest expense (33)
Income tax (770)
Net profit 1,674
Depreciation and amortisation 884 - - 884
Property, plant and equipment, net
as at 31 December 2008 8,245 2,790 - 11,035
Other assets 9,651
Total assets
as at 31 December 2008 20,686
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
90
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Annual Report 2
008
2008
: S
iam
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imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
6 Financial information by business segments (Cont’d)
For the year ended 31 December 2007
Wholesale Land
and Retail Rental
Business Business Elimination Total
Million Baht Million Baht Million Baht Million Baht
Sales 62,248 - (149) 62,099
Other income
- Third parties 1,828 7 - 1,835
- Related parties 17 301 (318) -
1,845 308 (318) 1,835
Total revenues 64,093 308 (467) 63,934
Profit from operation 1,548 305 (15) 1,838
Interest expense (5)
Income tax (541)
Net profit 1,292
Depreciation and amortisation 683 - - 683
Property, plant and equipment, net
as at 31 December 2007 8,476 2,790 - 11,266
Other assets 9,494
Total assets
as at 31 December 2007 20,760
Sales to third parties and related parties are carried out at market price.
Property, plant and equipment of each business are for its own operations. Other assets comprise mainly
cash and cash equivalents, inventories, amounts due from and loans to related companies.
On 1 June 2008, the Company sold its entire investment in Makro Office Centre Company Limited.
Consequently, the Company excluded the operational result of Makro Office Centre Company Limited from its
consolidated wholesale and retail business segment since the disposal date.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
91
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eport
Annual R
eport 2008
2008 : Sia
m M
akro
Public
Com
pany L
imite
d
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
7 Cash and cash equivalents
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Cash in hand 656,276,903 1,211,582,367 656,214,903 1,205,872,243
Deposits held at call with banks 1,269,107,696 322,537,618 1,168,028,693 161,158,603
Bill of exchange - 29,995,236 - -
1,925,384,599 1,564,115,221 1,824,243,596 1,367,030,846
The weighted average effective interest rates of deposits held at call with banks were 0.125% - 2.75% per
annum (2007 : 0.17% - 2.70% per annum).
Investments in debt securities represent fixed deposits and bill of exchange having weighted average
effective interest rates of 3.02% - 3.71% per annum (2007 : 2.86% - 5.00% per annum), having a maturity of
three months or less when purchased.
During the year, other income includes interest income from investments in debt securities as follows:
Consolidated Company
2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Investments in debt securities
Interest income 6.9 46.0 6.5 45.6
8 Trade accounts receivable, net
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Gross trade accounts receivable 157,469,939 192,924,395 58,477,103 20,186,641
Less allowance for doubtful accounts (6,380,669) (9,055,304) - -
Trade accounts receivable, net 151,089,270 183,869,091 58,477,103 20,186,641
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
92
Annual Report
Annual Report 2
008
2008
: S
iam
Makro
Public
Com
pany L
imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
8 Trade accounts receivable, net (Cont’d)
Outstanding trade accounts receivable as at 31 December can be analysed as follows:
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Up to 3 months 150,534,251 182,430,257 58,477,103 20,186,641
3 - 6 months 1,409,697 2,727,565 - -
6 - 12 months 2,379,046 917,728 - -
Over 12 months 3,146,945 6,848,845 - -
Total 157,469,939 192,924,395 58,477,103 20,186,641
Less allowance for doubtful accounts (6,380,669) (9,055,304) - -
Trade accounts receivable, net 151,089,270 183,869,091 58,477,103 20,186,641
9 Related party transactions
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled
by, or are under common control with, the Company, including holding companies, subsidiaries and fellow
subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly,
an interest in the voting power of the Company that gives them significant influence over the enterprise,
key management personnel, including directors and officers of the Company and close members of the family
of these individuals and companies associated with these individuals also constitute related parties.
In considering each possible related party relationship, attention is directed to the substance of the
relationship, and not merely the legal form.
SHV Group has control over the plan and the policies of the Company and its subsidiaries through the
appointment of directors and senior executive management. Therefore, members of the SHV Group are
considered to be related parties.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
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Annual R
eport 2008
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008
93
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eport
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eport 2008
2008 : Sia
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akro
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pany L
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008
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eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
9 Related party transactions (Cont’d)
Feature of relationships and related transactions
Transactions with subsidiaries
Trading transactions with and purchases of assets and services from subsidiaries are carried out under
commercial terms and conditions. They are treated in the same manner as unrelated parties and are
presented at market price.
The rental income and expenses charges in respect of land and buildings as specified in the agreement
between the Company and subsidiaries are based on the cost of the land and buildings plus related
expenses which can be compared to the available market price. Cost of the land and buildings means
acquisition cost and related expenses mean other related expenses incurred in bringing them into working
condition for their intended use.
Management services provided by the Company are charged at appropriate price upon the actual service
rendered to a subsidiary on the basis of an agreed annual fee.
The Company has entered into agreements with a subsidiary to use its trademarks. The fee for the use of the
trademarks represents a percentage of total sales under the trademark used.
A subsidiary has issued a promissory note at call to the Company, with an interest rate being set with
reference to the interest rates of short-term loans provided by financial institutions.
A subsidiary has issued 14-month promissory note to the Company with a due date of 26 February 2009,
based on the market interest rate.
Transactions with other related parties
1. Purchase of intangible assets
The Company has been granted rights to use software from overseas affiliated companies, being
members of the SHV Group, which is Orkam Asia Management AG.
The upgrade costs are specified in agreements and are on a reasonable basis for the Company and its
subsidiaries as follows:
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
94
Annual Report
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008
2008
: S
iam
Makro
Public
Com
pany L
imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
9 Related party transactions (Cont’d)
Transactions with other related parties (Cont’d)
1. Purchase of intangible assets (Cont’d)
a) The upgrade charge of a business intelligence application software is EUR 46,000. The agreement is
valid for 1 year and expired on 31 December 2007. The Company does not use this service in 2008.
b) The upgrade charge of B2B E-Commerce application software for year 2007 is EUR 38,053.74 (this
price is charged on service rendered). The agreement is effective on December 2006 for an unlimited
period of time, unless either party shall terminate it by written notice. This software supports sharing
and exchanging information through the Internet between the Company and suppliers. The Company
does not use this service in 2008.
c) Software license fee regarding supply chain management for fresh food application is charged for one
time in 2007 at EUR 75,000. The agreement is effective on January 2007 for an unlimited period of
time, unless either party shall terminate it by written notice. This software supports optimization and
follow up of centralized ordering for fresh food via a warehouse facility. The Company does not use
this service in 2008.
2. Service expenses
The Company has been granted rights to use software and trademarks and received consultant services
in relation to own brand development, management services and technical assistance in auction purchasing
and maintenance services for application software from both local and overseas affiliated companies,
being members of the SHV Group, which are Orkam Asia Management AG, Orkam Asia Trademark AG,
Makro Cash & Carry Distribution (M) SDN.BHD. and Makro Asia Management Ltd. respectively.
Software license fees, royalty fees, consultant service fees, management fees and maintenance service
fees for the use of such trademarks and services are as specified in agreements and are on a reasonable
basis for the Company and its subsidiaries as follows:
a) Royalty fee for the use of trademarks represents a percentage of their sales. The agreement is valid
for 1 year. However, the Company and its subsidiaries reserve the right to renew the agreement
every year and have the right to use such trademarks and service marks in business operations.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
95
Annual R
eport
Annual R
eport 2008
2008 : Sia
m M
akro
Public
Com
pany L
imite
d
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
9 Related party transactions (Cont’d)
Transactions with other related parties (Cont’d)
2. Service expenses (Cont’d)
b) Software license fee is NLG 50,000 (or EUR 22,689 in equivalent) for each Makro new store. The
payment is made once a new store is open. The agreement is valid for 1 year and is renewable
annually. Regarding the benefit from this licence, the Company will obtain specific IT software which
is necessary to its business operations.
c) Annual maintenance fee is 20% of the total user license fees in which each license fee costs USD
550 per user. The agreement is for unlimited period of time, unless party shall terminate the agreement
by written notice. The Company will receive maintenance services for the application software.
d) Annual membership fees in relation to cost sharing for the shared use of auction tools were charged
proportionally to the auction volumes made by the Company amounting to USD 12,000. The
agreement is valid for 1 year and expired on 31 December 2007 and the Company will receive
auction purchasing services.
e) Annual fee for commercial consultant service in relation to the development and implementation
regarding joint buying, private label and auction activities is charged in Baht 2,000,000 (2007 : Baht
14,190,000). The agreement is valid for 1 year and expired on 31 December 2008. Regarding the
benefit from this service agreement, the Company will receive consultant service in order to improve
the cost structure, the efficiency and quality of the buying process.
f) Maintenance fee regarding business intelligence application is charged at EUR 750 per user and
annual maintenance fee is 25% of the total user license fee. The agreement is for unlimited period of
time, unless party shall terminate the agreement by written notice. Regarding the benefit from this
service agreement, the Company will receive maintenance services for the application software.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
96
Annual Report
Annual Report 2
008
2008
: S
iam
Makro
Public
Com
pany L
imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
9 Related party transactions (Cont’d)
The following material transactions were carried out with related parties:
9.1) Sales of goods, service income, interest income, and dividend income
Consolidated Company
For the years ended 31 December 2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Sales of goods
Subsidiaries - - 31.4 35.7
Other related parties - 1.9 - 1.9
- 1.9 31.4 37.6
Service income
and interest income:
Subsidiaries - - 16.8 16.7
Other related parties 0.5 0.5 0.5 0.5
0.5 0.5 17.3 17.2
Dividend income
Subsidiaries - - 233.5 235.0
9.2) Purchases of goods, assets and service expenses
Consolidated Company
For the years ended 31 December 2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Purchases of goods:
Subsidiaries - - 108.5 112.8
- - 108.5 112.8
Purchases of intangible assets:
Other related parties - 7.0 - 7.0
- 7.0 - 7.0
Service expenses:
Subsidiaries - - 304.1 301.3
Other related parties 147.6 176.4 144.4 168.9
147.6 176.4 448.5 470.2
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
97
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eport
Annual R
eport 2008
2008 : Sia
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akro
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Annual Report 2
008
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eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
9 Related party transactions (Cont’d)
The following material transactions were carried out with related parties: (Cont’d)
9.3) Outstanding balances arising from sales and purchases of goods
Consolidated Company
2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Trade accounts payable
to related parties
Subsidiary - - 17.4 24.3
- - 17.4 24.3
9.4) Advances and loans to related parties
Consolidated Company
2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Advances to
Subsidiaries - - 1.2 2.4
- - 1.2 2.4
Short-term loans
to related parties
Subsidiaries - - 135.0 125.0
- - 135.0 125.0
Total advances and short-term
loans to related parties - - 136.2 127.4
Long-term loan
to a related party
Subsidiary
- Not later than 1 year - - 100.0 -
- Later than 1 year - - - 100.0
Total long-term loan
to a related party - - 100.0 100.0
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
98
Annual Report
Annual Report 2
008
2008
: S
iam
Makro
Public
Com
pany L
imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
9 Related party transactions (Cont’d)
The following material transactions were carried out with related parties: (Cont’d)
9.4) Advances and loans to related parties (Cont’d)
Consolidated Company
2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Movements of short-term loans to
subsidiaries are as follows:
Opening balance - - 125.0 105.0
Net increase during the year - - 10.0 20.0
Closing balance - - 135.0 125.0
Short-term loans to subsidiaries, being in the form of promissory notes, are due at call.
Consolidated Company
2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Movements of long-term loan
to a subsidiary are as follows:
Opening balance - - 100.0 174.0
Net decrease during the year - - - (74.0)
Closing balance - - 100.0 100.0
As at 31 December 2008 and 2007, the outstanding balance of this promissory note was Baht 100 million
with due on 26 February 2009.
9.5) Dividend receivable
Consolidated Company
2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Dividend receivable
Subsidiary - - 119.0 126.0
- - 119.0 126.0
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
99
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eport
Annual R
eport 2008
2008 : Sia
m M
akro
Public
Com
pany L
imite
d
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
9 Related party transactions (Cont’d)
The following material transactions were carried out with related parties: (Cont’d)
9.6) Deposits for land lease paid to a subsidiary
Consolidated Company
2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Deposits for land lease
paid to
Subsidiary - - 146.7 146.7
- - 146.7 146.7
9.7) Advances from related parties
Consolidated Company
2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Advances from related parties
Subsidiary - - 0.9 0.9
Other related parties 69.9 71.1 69.8 67.3
69.9 71.1 70.7 68.2
9.8) Deposits for land lease received from a subsidiary
Consolidated Company
2008 2007 2008 2007
Million Baht Million Baht Million Baht Million Baht
Deposits for land lease
received from
Subsidiary - - - 0.6
- - - 0.6
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
100
Annual Report
Annual Report 2
008
2008
: S
iam
Makro
Public
Com
pany L
imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
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Annual R
eport 2008
10 Inventories, net
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Finished goods 5,744,186,388 5,591,207,833 5,557,532,280 5,220,274,194
Goods-in-transit 28,567,363 26,123,300 689,088 740,450
5,772,753,751 5,617,331,133 5,558,221,368 5,221,014,644
Less allowance for obsolete
and shrinkage inventories (155,375,727) (131,042,679) (147,872,807) (112,278,198)
Inventories, net 5,617,378,024 5,486,288,454 5,410,348,561 5,108,736,446
11 Other current assets, net
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Valued added tax receivable 267,073,558 312,431,205 267,077,173 312,431,205
Accrued income 161,323,619 173,134,215 161,310,237 161,173,030
Dividend receivable (Note 9.5) - - 119,000,000 126,000,000
Other receivables 31,477,368 35,553,009 30,858,158 34,926,521
Other 99,137,604 123,255,620 97,225,464 119,949,575
Total 559,012,149 644,374,049 675,471,032 754,480,331
Less allowance for doubtful
accounts of other receivables (8,330,630) (11,718,447) (8,330,630) (11,070,668)
Other current assets, net 550,681,519 632,655,602 667,140,402 743,409,663
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
101
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eport
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eport 2008
2008 : Sia
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akro
Public
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008
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eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
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Annual R
eport 2008
12 Investments in subsidiaries
Company
Investment value Dividend received
% under cost method for the year ended
Paid-up Ownership 31 December 31 December 31 December
Subsidiaries Business Relationship capital Interest 2008 2007 2008 2007
(Baht’000) (Baht’000) (Baht’000) (Baht’000) (Baht’000)
Makro Properties Land investment & Being shareholder 700,000 99.99 710,641 710,641 213,500 210,000
Limited property leasing and under the same
management
Makro Office Retail business of Being shareholder 200,000 99.99 - 200,000 20,000 25,000
Centre Company office supplies, office and management
Limited equipment, office participation
furniture and business
service center
Siam Food Importing and Being shareholder 10,000 99.99 234,764 234,764 - -
Services Limited trading frozen foods, and management
provide services such participation
as freight, delivery,
rental and storage
945,405 1,145,405 233,500 235,000
Disposal of investment in a subsidiary - Makro Office Centre Company Limited
On 28 May 2008, the Company has entered into a Share Sale and Purchase Agreement in order to sell its
shares in Makro Office Centre Company Limited. The shares were transferred on 1 June 2008 at the price of
Baht 403.4 million.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
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Annual R
eport 2008
Annual Report 2
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Annual R
eport 2008
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Annual R
eport 2008
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102
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12 Investments in subsidiaries (Cont'd)
Disposal of investment in a subsidiary - Makro Office Centre Company Limited (Cont'd)
Total revenues, net profit for the period, and net cash flows for the period of Makro Office Centre Company Limited
which are included in the consolidated financial statements to the disposal date, 31 May 2008, are as follows:
For the period from For the
1 January year ended
to 31 May 2008 31 December 2007
Baht'000 Baht'000
Total revenues 671,407 1,566,603
Total expenses (654,551) (1,531,774)
Profit before income tax 16,856 34,829
Income tax (6,819) (11,604)
Net profit for the period/year 10,037 23,225
For the period from For the
1 January year ended
to 31 May 2008 31 December 2007
Baht'000 Baht'000
Cash flow from operating activities 73,465 36,209
Cash flow from investing activities 12 (26,178)
Cash flow from financing activities (20,000) (25,000)
Net cash inflow (outflow) for the period/year 53,477 (14,969)
The assets and liabilities of Makro Office Centre Company Limited were as follows:
As at 31 May 2008 As at
(Disposal date) 31 December 2007
Baht'000 Baht'000
Total assets 532,552 516,533
Total liabilities (305,149) (279,167)
Net assets 227,403 237,366
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
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eport 2008
Annual Report 2
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Annual R
eport 2008
Annual Report 2
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eport 2008
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103
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12 Investments in subsidiaries (Cont'd)
Disposal of investment in a subsidiary - Makro Office Centre Company Limited (Cont'd)
Gain on sale of investment in a subsidiary
The Company has a net gain on sale of investment in a subsidiary before tax of approximately Baht 168.7 million
in the consolidated financial statements (the Company : Baht 196.1 million) after deduction of related expenses.
Net cash received on disposal of investment in a subsidiary was as follows:
Consolidated Company
Baht'000 Baht'000
Proceeds from disposal of investment in a subsidiary 396,148 396,148
Less cash and cash equivalents in a sold subsidiary (137,549) -
Net cash received on disposal of investment in a subsidiary 258,599 396,148
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
104
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008
2008
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iam
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Public
Com
pany L
imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
13 Property, plant and equipment, net
Consolidated
Building &
Leasehold building Equipments & Construction
Land improvement improvement Computer Vehicle in progress Total
Baht Baht Baht Baht Baht Baht Baht
At 31 December 2007
Cost 4,743,657,577 177,215,717 6,350,665,621 6,967,596,849 50,762,743 2,117,391 18,292,015,898
Less accumulated
depreciation - (98,421,001) (2,385,001,213) (4,501,987,111) (40,264,520) - (7,025,673,845)
Net book value 4,743,657,577 78,794,716 3,965,664,408 2,465,609,738 10,498,223 2,117,391 11,266,342,053
For the year ended 31 December 2008
Opening net
book value 4,743,657,577 78,794,716 3,965,664,408 2,465,609,738 10,498,223 2,117,391 11,266,342,053
Additions 370,079,616 - 114,908,530 265,909,409 26,860,000 14,526,273 792,283,828
Reclassification - - - 2,999,538 - - 2,999,538
Disposals (99,032,614) (43,983,901) (2,438,741) (45,605,981) (1,342,576) - (192,403,813)
Depreciation
charge
(Note 24) - (6,218,533) (291,834,065) (526,236,535) (9,687,087) - (833,976,220)
Closing net
book value 5,014,704,579 28,592,282 3,786,300,132 2,162,676,169 26,328,560 16,643,664 11,035,245,386
At 31 December 2008
Cost 5,014,704,579 177,000,368 6,443,888,881 6,826,072,604 56,443,743 16,643,664 18,534,753,839
Less accumulated
depreciation - (148,408,086) (2,657,588,749) (4,663,396,435) (30,115,183) - (7,499,508,453)
Net book value 5,014,704,579 28,592,282 3,786,300,132 2,162,676,169 26,328,560 16,643,664 11,035,245,386
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
105
Annual R
eport
Annual R
eport 2008
2008 : Sia
m M
akro
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Com
pany L
imite
d
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
13 Property, plant and equipment, net (Cont’d)
Company
Building &
Leasehold building Equipments & Construction
Land improvement improvement Computer Vehicle in progress Total
Baht Baht Baht Baht Baht Baht Baht
At 31 December 2007
Cost 1,953,628,159 57,747,907 6,327,253,712 6,675,052,693 32,970,092 2,117,391 15,048,769,954
Less accumulated
depreciation - (26,588,507) (2,371,098,027) (4,263,840,768) (28,040,653) - (6,689,567,955)
Net book value 1,953,628,159 31,159,400 3,956,155,685 2,411,211,925 4,929,439 2,117,391 8,359,201,999
For the year ended 31 December 2008
Opening net
book value 1,953,628,159 31,159,400 3,956,155,685 2,411,211,925 4,929,439 2,117,391 8,359,201,999
Additions 370,079,616 - 110,504,220 260,829,449 26,860,000 13,888,322 782,161,607
Reclassification - - - 2,999,538 - - 2,999,538
Disposals (99,032,614) (20,818) (2,432,365) (1,863,732) (1,342,574) - (104,692,103)
Depreciation
charge
(Note 24) - (2,546,299) (288,868,224) (515,748,148) (7,513,681) - (814,676,352)
Closing net
book value 2,224,675,161 28,592,283 3,775,359,316 2,157,429,032 22,933,184 16,005,713 8,224,994,689
At 31 December 2008
Cost 2,224,675,161 57,539,727 6,416,072,662 6,528,448,489 39,847,092 16,005,713 15,282,588,844
Less accumulated
depreciation - (28,947,444) (2,640,713,346) (4,371,019,457) (16,913,908) - (7,057,594,155)
Net book value 2,224,675,161 28,592,283 3,775,359,316 2,157,429,032 22,933,184 16,005,713 8,224,994,689
As at 31 December 2008, certain plant and equipment items have been fully depreciated but are still in use.
The original cost before deducting accumulated depreciation of those assets amounted to Baht 3,383 million
(2007: Baht 3,414 million) in the consolidated financial statements, and Baht 3,357 million (2007: Baht 3,213
million) in the Company financial statements.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
106
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008
2008
: S
iam
Makro
Public
Com
pany L
imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
14 Land held for sale or future development, net
Land held for sale or future development, net represents land amounting to Baht 135,500,000 net of the
impairment provision as follows:
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Land held for sale
or future development 308,572,549 308,572,549 135,500,000 135,500,000
Less allowance
for impairment loss (173,072,549) (173,072,549) - -
Land held for sale
or future development, net 135,500,000 135,500,000 135,500,000 135,500,000
15 Leasehold right, net
Consolidated Company
Baht Baht
As at 31 December 2007
Cost 873,667,037 830,186,827
Less accumulated amortisation (226,305,515) (207,058,974)
Net book value 647,361,522 623,127,853
Less current portion of leasehold right (31,686,446) (30,104,241)
Leasehold right, net 615,675,076 593,023,612
Transactions during the year ended 31 December 2008
Opening net book value 647,361,522 623,127,853
Disposals (22,651,464) -
Amortisation (Note 24) (31,686,446) (30,104,241)
Closing net book value 593,023,612 593,023,612
As at 31 December 2008
Cost 830,186,827 830,186,827
Less accumulated amortisation (237,163,215) (237,163,215)
Net book value 593,023,612 593,023,612
Less current portion of leasehold right (30,104,241) (30,104,241)
Leasehold right, net 562,919,371 562,919,371
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
107
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eport
Annual R
eport 2008
2008 : Sia
m M
akro
Public
Com
pany L
imite
d
Annual Report 2
008
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eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
16 Goodwill, net
Consolidated
2008 2007
Baht Baht
Cost 196,922,838 196,922,838
Less accumulated amortisation (29,538,426) (29,538,426)
Net book value 167,384,412 167,384,412
17 Other intangible assets, net
Consolidated
Computer
Computer software under
software installation Total
Baht Baht Baht
As at 31 December 2007
Cost 77,253,432 12,380,039 89,633,471
Less accumulated amortisation (48,012,999) - (48,012,999)
Net book value 29,240,433 12,380,039 41,620,472
Transactions during the year ended 31 December 2008
Opening net book value 29,240,433 12,380,039 41,620,472
Additions 11,668,999 10,929,365 22,598,364
Reclassification 9,324,502 (12,324,040) (2,999,538)
Disposals (4,203,444) (56,000) (4,259,444)
Amortisation (Note 24) (18,122,191) - (18,122,191)
Closing net book value 27,908,299 10,929,364 38,837,663
As at 31 December 2008
Cost 84,718,580 10,929,364 95,647,944
Less accumulated amortisation (56,810,281) - (56,810,281)
Net book value 27,908,299 10,929,364 38,837,663
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
108
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008
2008
: S
iam
Makro
Public
Com
pany L
imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
17 Other intangible assets, net (Cont'd)
Company
Computer
Computer software under
software installation Total
Baht Baht Baht
As at 31 December 2007
Cost 56,344,113 12,324,039 68,668,152
Less accumulated amortisation (34,115,580) - (34,115,580)
Net book value 22,228,533 12,324,039 34,552,572
Transactions during the year ended 31 December 2008
Opening net book value 22,228,533 12,324,039 34,552,572
Additions 11,668,999 10,929,365 22,598,364
Reclassification 9,324,502 (12,324,040) (2,999,538)
Disposals (1) - (1)
Amortisation (Note 24) (15,773,877) - (15,773,877)
Closing net book value 27,448,156 10,929,364 38,377,520
As at 31 December 2008
Cost 80,312,151 10,929,364 91,241,515
Less accumulated amortisation (52,863,995) - (52,863,995)
Net book value 27,448,156 10,929,364 38,377,520
As at 31 December 2008, certain intangible asset items have been fully amortised but are still in use.
The original cost before deducting accumulated amortisation of those assets are amounted to Baht 35 million
(2007 : Baht 28 million) in the consolidated financial statements, and Baht 35 million (2007 : Baht 20 million)
in the Company financial statements.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
109
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eport
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eport 2008
2008 : Sia
m M
akro
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pany L
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d
Annual Report 2
008
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eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
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008
18 Short-term loans from financial institutions
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Promissory notes 1,150,000,000 495,000,000 1,150,000,000 495,000,000
Trust receipts 64,752,257 69,851,424 - -
1,214,752,257 564,851,424 1,150,000,000 495,000,000
As at 31 December 2008, promissory notes represent promissory notes issued to banks denominated in Thai
Baht. The short-term loans bear a fixed interest rate of 3.85% - 4.25% per annum (2007 : 3.44% per annum)
and due at call.
As at 31 December 2008, trust receipts are contracted with domestic banks to convert purchases in foreign
currency to be short-term loans in Baht. The trust receipts bear interest at the average rates of 3.75% - 4.38%
per annum (2007 : 3.95% - 4.49% per annum).
19 Provision for employee benefits
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Opening book value 92,224,456 75,861,900 90,409,289 74,957,245
Reserve during the year 26,185,494 22,060,638 25,838,701 20,999,671
Transfer during the year (1,772,377) - - -
Payment during the year (8,561,997) (5,698,082) (8,561,997) (5,547,627)
Closing book value 108,075,576 92,224,456 107,685,993 90,409,289
The determination of provision for employee benefits is based on a number of assumptions, including
discounted rate, future basis salary increase, service years, employee turnover rate, and others.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
110
Annual Report
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008
2008
: S
iam
Makro
Public
Com
pany L
imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
20 Contingencies and commitments
As at 31 December 2008 and 2007, the Company and its subsidiaries have contingent liabilities in respect of
bank and other guarantees and other matters arising in the ordinary course of business from which it is
anticipated that no material liabilities will arise. In the ordinary course of business, the Company and its
subsidiaries have provided guarantees to third parties as follows:
Bank guarantees
As at 31 December 2008 and 2007, banks have provided guarantees on behalf of the Company and its
subsidiaries, primarily in respect of electricity and rental and service agreement as follows:
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Bank guarantees 92,352,622 80,827,400 91,349,222 79,375,400
Operating lease agreements
The future minimum payments under operating lease agreements as at 31 December are as follows:
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Not later than 1 year 111,974,479 156,672,799 397,934,083 208,525,074
Later than 1 year and not later than 5 years 436,760,520 449,549,890 876,716,520 217,679,802
Later than 5 years 1,387,403,291 1,296,192,600 1,387,403,291 1,236,480,399
1,936,138,290 1,902,415,289 2,662,053,894 1,662,685,275
Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements is
as follows:
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Property, plant and equipment 481,977,750 71,897,385 481,977,750 69,919,985
Computer software 838,475 - 838,475 -
As at 31 December 2008, the Company has capital commitments mainly related to the purchasing of land.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
111
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eport
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eport 2008
2008 : Sia
m M
akro
Public
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pany L
imite
d
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
21 Share capital and premium on share capital
As at 31 December 2008 and 2007, the total authorised number of ordinary shares is 240,000,000 shares
with a par value of Baht 10 per share. All issued shares are fully paid-up.
Number of Ordinary Share
shares Shares Premium Total
Baht Baht Baht
At 31 December 2006 240,000,000 2,400,000,000 3,290,152,068 5,690,152,068
Issue of shares - - - -
At 31 December 2007 240,000,000 2,400,000,000 3,290,152,068 5,690,152,068
Issue of shares - - - -
At 31 December 2008 240,000,000 2,400,000,000 3,290,152,068 5,690,152,068
22 Legal reserve
Consolidated Company
2008 2007 2008 2007
Baht Baht Baht Baht
Opening balance 240,000,000 240,000,000 240,000,000 240,000,000
Appropriation during the year - - - -
Closing balance 240,000,000 240,000,000 240,000,000 240,000,000
Under the Public Companies Act, the Company is required to set aside as a statutory reserve at least 5% of
its net profit after accumulated deficit brought forward (if any) until the reserve is not less than 10% of the
registered capital. The legal reserve is non-distributable as dividends.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
112
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008
2008
: S
iam
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pany L
imited
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eport 2008
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eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
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008
Annual R
eport 2008
Annual Report 2
008
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eport 2008
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008
23 Other income
Consolidated Company
2008 2007 2008 2007
Notes Baht Baht Baht Baht
Gain on sale of investment
in a subsidiary 12 168,745,208 - 196,147,769 -
Rental income 9.1 174,005,063 164,943,050 164,374,237 153,766,307
Gain from disposal of land 109,467,386 - 109,467,386 -
Dividend income 9.1, 12 - - 233,499,817 234,999,928
Interest income 9.1 14,366,280 60,882,447 22,743,730 69,155,859
Other 9.1 226,731,486 117,945,534 228,803,399 117,046,811
Total 693,315,423 343,771,031 955,036,338 574,968,905
24 Selling and administrative expenses
The following expenditure items, classified by nature, have been included in selling and administrative
expenses.
Consolidated Company
2008 2007 2008 2007
Notes Baht Baht Baht Baht
Depreciation on property, plant
and equipment 13 833,976,220 621,584,788 814,676,352 583,932,239
Amortisation of leasehold right 15 31,686,446 35,052,557 30,104,241 30,937,976
Amortisation of goodwill - 9,846,142 - -
Amortisation of other
intangible assets 17 18,122,191 16,925,771 15,773,877 13,611,636
Land rental 46,915,583 45,373,267 340,219,583 338,677,267
Employee costs 1,291,075,921 1,162,197,776 1,219,709,295 1,044,144,847
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
113
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eport 2008
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pany L
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eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
25 Basic earnings per share
Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted
average number of ordinary shares in issue during the year, that is 240,000,000 shares in the year 2008
(2007 : 240,000,000 shares). There are no dilutive instruments in issue.
Consolidated Company
2008 2007 2008 2007
Net profit (Baht) 1,674,123,504 1,291,601,866 1,701,295,011 1,292,783,908
Weighted average number of
ordinary shares (Shares) 240,000,000 240,000,000 240,000,000 240,000,000
Basic earnings per share (Baht) 6.98 5.38 7.09 5.39
26 Dividends
A 2008 interim dividend from current net profit after tax for the nine-month period ended 30 September 2008
of Baht 1.00 per share amounting to a total of Baht 240 million was approved at the Board of Directors'
meeting on 7 November 2008 and fully paid in the fourth quarter of 2008.
A 2008 interim dividend from current net profit after tax and unappropriated retained earnings as at 30 June
2008 of Baht 3.00 per share amounting to a total of Baht 720 million was approved at the Board of Directors'
meeting on 7 August 2008 and fully paid in the third quarter of 2008.
A dividend in respect of 2007 of Baht 2.00 per share amounting to a total of Baht 480 million was approved at
the annual shareholders' meeting on 29 April 2008 and fully paid in the second quarter of 2008.
A 2007 interim dividend from current net profit after tax for the nine-month period ended 30 September 2007
of Baht 1 per share amounting to a total of Baht 240 million was approved at the Board of Directors' meeting
on 8 November 2007 and fully paid in the fourth quarter of 2007.
A 2007 interim dividend from current net profit after tax and unappropriated retained earnings as at 30 June
2007 of Baht 2.25 per share amounting to a total of Baht 540 million was approved at the Board of Directors'
meeting on 9 August 2007 and fully paid in the third quarter of 2007.
A dividend in respect of 2006 of Baht 4.00 per share amounting to a total of Baht 960 million was approved at
the annual shareholders' meeting on 27 April 2007 and fully paid in the second quarter of 2007.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
114
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008
2008
: S
iam
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Public
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pany L
imited
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
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008
27 Subsequent events
The Board of Directors' meeting of the Company on 19 February 2009 has unanimously resolved to propose
to the Annual General Shareholder's Meeting of the Company as follows:
1 to approve Siam Makro Public Company Limited to accept the entire business transfer from Makro Properties
Limited, a wholly owned subsidiary on 31 May 2009 and to dissolve Makro Properties Limited by 31
December 2009. Such acceptance of the entire business transfer transaction must be approved by the
shareholders' meeting.
2 to approve Siam Makro Public Company Limited to declare the final dividend payment for the year 2008 at
the rate of Baht 2.50 per share. Such declaration of final dividend payment must be approved by the
shareholders' meeting.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSFor the years ended 31 December 2008 and 2007
Siam Makro Public Company Limited
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
008
115
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eport 2008
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eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
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Annual R
eport 2008
Annual Report 2
008
Annual R
eport 2008
Annual Report 2
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Annual R
eport 2008
Annual Report 2
008
� Siam Makro Public Company Limited, Head Office
3498 2nd Fl., Lardprao Rd., Klongchan, Bangkapi,
Bangkok 10240
Tel : 0-2375-7000, 0-2723-1000 Fax : 0-2375-2927
� Makro Store Lardprao Branch
3498 Lardprao Rd., Klongchan, Bangkapi, Bangkok 10240
Tel : 0-2375-2781-9 Fax : 0-2375-9162
� Makro Store Chaengwattana Branch
34/54 Moo 1, Chaengwattana Rd., Klongklear,
Pakkred, Nonthaburi 11120
Tel : 0-2574-0670 Fax : 0-2574-6045
� Makro Store Srinakarin Branch
422 Moo 5, Srinakarin Rd., Samrongnua,
A. Muang, Samutprakarn 10270
Tel : 0-2383-4104 Fax : 0-2383-4441
� Makro Store Bangbon Branch
40/8 Moo 10, Ekachai Ring Road-Petchkasem,
Bangbon, Bangbon, Bangkok 10150
Tel : 0-2416-8080-90 Fax : 0-2416-5974
� Makro Store Chonburi Branch
55/3 Moo 2, Sukhumvit Rd., T.Samed, A.Muang,
Chonburi 20000
Tel : (038) 279-201 Fax : (038) 279-200
� Makro Store Chiang Mai Branch
152 Moo 6, T.Nong-Pa-Krung, A.Muang, Chiang Mai 50000
Tel : (053) 116-200-10 Fax : (053) 116-217
� Makro Store Nakhon Ratchasima Branch
523 Mittraphap-Nongkai Rd., T.Naimuang,
A.Muang, Nakhon Ratchasima 30000
Tel : (044) 230-477-90 Fax : (044) 230-471-2
� Makro Store Rangsit Branch
189 Phaholyothin Rd., T.Prachathipat,
A.Thanyaburi, Pathumthani 12130
Tel : 0-2992-1011-21 Fax : 0-2992-2213
� Makro Store Hat Yai Branch
345 Moo 5, Kanjanavanit Rd., T.Kho-Hong,
A.Hat Yai, Songkhla 90110
Tel : (074) 428-320-9 Fax : (074) 210-969
� Makro Store Udonthani Branch
207/3 Moo 14, T.Makkhang, A.Muang, Udonthani 41000
Tel : (042) 322-922 Fax : (042) 322-944
� Makro Store Phitsanulok Branch
1199 Boromtrirokkanart 2 Rd., T.Naimuang,
A.Muang, Phitsanulok 65000
Tel : (055) 218-765 Fax : (055) 218-764
� Makro Store Khon Kaen Branch
195 Moo 17, Mittraphap, T.Naimuang, A.Muang,
Khon Kaen 40000
Tel : (043) 325-050 Fax : (043) 325-065
� Makro Store Surat Thani Branch
216 Moo 4, Chonkasem Rd., T.Makamtey,
A.Muang, Surat Thani 84000
Tel : (077) 219-855 Fax : (077) 219-866
MAKRO CASH & CARRY
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� Makro Store Ubol Ratchathani Branch
333 Moo 15, T.Khamyai, A.Muang,
Ubol Ratchathani 34000
Tel : (045) 281-677-90 Fax : (045) 281-688
� Makro Store Rayong Branch
8/2 Moo 3, T.Tubma, A.Muang, Rayong 21000
Tel : (038) 875-300 Fax : (038) 875-301
� Makro Store Nakhon Sawan Branch
67/15 Moo 6, T.Nakhon Sawan East, A.Muang,
Nakhon Sawan 60000
Tel : (056) 325-200 Fax : (056) 325-210
� Makro Store Charansanitwongse Branch
521, 521/27 Charansanitwongse Rd.,
Bangkhunsri, Bangkoknoi, Bangkok 10700
Tel : 0-2864-5714 Fax : 0-2864-5713
� Makro Store Sathorn Branch
1 Narathiwasratchanakarin Rd.,
Thungwatdon, Sathorn, Bangkok 10120
Tel : 0-2676-0676 Fax : 0-2676-1676
� Makro Store Nakhon Pathom Branch
86 Moo 13, T.Prongmadua, A.Muang,
Nakhon Pathom 73000
Tel : (034) 200-711-27 Fax : (034) 200-728-9
� Makro Store Surin Branch
4/3 Lukmuang Rd., T. Naimuang A.Muang, Surin 32000
Tel : (044) 531-759-66 Fax : (055) 531-777
� Makro Store Samsen Branch
935/11 Samsem Rd., Thanonnakornchaisri,
Dusit, Bangkok 10300
Tel : 0-2241-8400-8 Fax : 0-2241-8409
� Makro Store Nakhon Si Thammarat Branch
93/7 Moo 2, Garome Rd., T. Posadet, A. Muang
Nakhon Si Thammarat, Nakhon Si Thammarat 84000
Tel : (075) 316-680-90 Fax : (075) 316-698
� Makro Store Chiang Rai Branch
12 Moo 17, T. Bandoo, A.Muang Chiang Rai, Chiang Rai 57000
Tel : (053) 703-688 Fax : (053) 703-679
� Makro Store Sakon Nakhon Branch
459 Moo 3, Bankoksomhong Rd., T.Thatchoengchum,
A.Muang Sakon Nakhon, Sakon Nakhon 47000
Tel : (042) 731-078-97 Fax : (042) 731-076-7
� Makro Store Suphan Buri Branch
290/2 Moo 4, T.Sanam-Chai,
A.Muang Suphan Buri, Suphan Buri 72000
Tel : (035) 547-250-65 Fax : (035) 547-271
� Makro Store Chanthaburi Branch
21/11 Moo 11, T.Plubpla, A.Muang Chanthaburi,
Chanthaburi 22000
Tel : (039) 355-240-54 Fax : (039) 355-257
� Makro Store Phuket Branch
77 Moo 5, T.Vichit, A.Muang Phuket, Phuket 83000
Tel : (076) 249-791-800 Fax : (076) 249-801
MAKRO CASH & CARRY
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008
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eport 2008
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� Makro Store Roi Et Branch
32/1 Taewapiban Rd., T.Naimuang,
A.Muang Roi Et, Roi Et 45000
Tel : (043) 525-680-90 Fax : (043) 525-692-3
� Makro Store Trang Branch
89 Moo 2, T.Khok-Lo, A.Muang Trang, Trang 92000
Tel : (075) 228-050-60 Fax : (075) 228-061
� Makro Store Sakaeo Branch
1000 Suwannasorn Rd., T.Sa Kaeo,
A.Muang Sa Kaeo, Sa Kaeo 27000
Tel : (037) 220-801-18 Fax : (037) 220-822-3
� Makro Store Ko Samui Branch
115/52 Moo 6 T.Bo Phut, A.Ko Samui,
Surat Thani 84320
Tel : (077) 960-140-60 Fax : (077) 960-161-2
� Makro Store Buri Ram Branch
151 Moo 7 T.Isan, A.Muang Buri Ram,
Buri Ram 31000
Tel : (044) 690-300-28 Fax : (044) 690-329
� Makro Store Sisaket Branch
999 Moo 6 T.Po, A.Muang Sisaket, Sisaket 33000
Tel : (045) 613-838 Fax : (045) 617-648
� Makro Store Lamphun Branch
204 Moo 4 T.Banklang, A.Muang Lamphun,
Lamphun 51000
Tel : (053) 581-285 Fax : (053) 581-333-4
� Makro Store Krabi Branch
119 Moo 1 T.Saitai, A.Muang Krabi, Krabi 81000
Tel : (075) 700-101-10 Fax : (075) 700-122
� Makro Store Phetchaburi Branch
103 Moo 1 T.Huasaphan, A.Muang Phetchaburi,
Phetchaburi 76000
Tel : (032) 711-616 Fax : (032) 711-612-3
� Makro Store Chaiyaphum Branch
999 Moo 1 T.Bungkhal, A.Muang Chaiyaphum,
Chaiyaphum 36000
Tel : (044) 818-288 Fax : (044) 818-292
� Makro Store Saraburi Branch
66/3 Moo 2 T.Talingchan, A.Muang Saraburi,
Saraburi 18000
Tel : (036) 731-100 Fax : (036) 731-111
� Makro Store Pran Buri Branch
567 Moo 3 T.Wangpong, A.Pran Buri,
Prachuap Khiri Khan 77120
Tel : (032) 630-100 Fax : (032) 630-000-1
� Makro Store Chachoengsao Branch
21/4 Moo 5 T.Wangtakhean, A.Muang
Chachoengsao, Chachoengsao 31000
Tel : (038) 511-518 Fax : (038) 515-174
� Makro Store Chiang Mai 2 Branch
191 Moo 7 T.Maehia, A.Muang Chiang Mai,
Chiang Mai 50000
Tel : (053) 447-799 Fax : (053) 447-804-5
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: S
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imited
� Siam Food Services Limited. Head Office
2439 Old Paknam Railway Rd., Prakhanong,
Klongtoey, Bangkok 10110
Tel : 0-2240-4000 Fax : 0-2249-7294
� Siam Food Services, Ko Samui Branch
115/52 Moo 6 T.Bo Phut, A.Ko Samui,
Surat Thani 84320
Tel : (077) 960-420-2 Fax : (077) 960-423
SIAM FOOD SERVICES118
Chiang Rai
Chiang Mai
Phitsanulok
Nakhon Sawan
Khon Kaen
Ubol Ratchathani
Surin
Buri Ram
Lamphun
Sisaket
Bangkok
Hat Yai
Surat Thani
Nakhon SiThammarat
Ko Samui
Sakaeo
Saraburi
Chonburi
Chachoengsao
Nakhon Pathom
Phetchaburi
Pran Buri
Rayong
Nakhon Ratchasima
Chaiyaphum
Udonthani
Sakon Nakhon
Phuket
TrangKrabi
Chanthaburi
Roi Et
Suphan Buri
Bangkok Branches :
Lardprao
Chaengwattana
Srinakarin
Bangbon
Rangsit
Charansanitwongse
Sathorn
Samsen
Chiang Mai Branches :
T.Nong-Pa-Krung,
A.Muang Chiang Mai
T.Maehia,
A.Muang Chiang Mai
Socialist Republic ofThe Union of Myanmar
Democratic People'sRepublic Of Laos
Democratic Kampuchea
Makro Operations
in Thailand
Makro Operations
in Thailand
Siam Makro Public Company Limited
Tel : 0-2375-7000, 0-2723-1000 Fax : 0-2375-2927
www.siammakro.co.th
3498 2 Fl., Lardprao Rd., Klongchan, Bangkapi, Bangkok 10240nd
![Makro Revista_7..[1]](https://static.documents.pub/doc/80x56/5571feb649795991699bf80c/makro-revista71.jpg)
