Risk Management and Business Continuity Management

1. Risk from Economic Volatility and the Real Estate Sector

In 2025, both domestic and international economic conditions remain volatile and uncertain. The recovery of the Thai economy will be gradual and uneven. Interest rates, household debt, the cost of living, and consumer confidence will continue to constrain spending, particularly on high-value goods or products for which purchases can be delayed. At the same time, global economic risks, economic slowdowns in business partner countries, exchange rate volatility, fluctuations in energy and raw material prices, and geopolitical tensions could impact trade, investment, and supply chain costs, resulting in increased uncertainty for overall business operations. For the real estate sector, recovery remains limited due to stringent mortgage loans and the interest rate environment, resulting in a slowdown in new project launches and transfers of ownership. This may affect demand for furniture, home furnishings, and home decorative items. Furthermore, volatility in raw material transportation costs and intense competition could increase pressure on the cost structure and profit margins of real estate developers.

The Company has established risk management measures by enhancing business efficiency in terms of both quality and value for money, sourcing and selecting products that meet changing consumer needs, managing costs of products and operations, and maintaining a stable capital structure. Currently, the Company has no long-term liabilities, which reduces interest rate fluctuation risk and alleviates pressure on financing costs in an uncertain economic environment.

In a situation where consumer purchasing power is slowing, coupled with competition from low-priced imported goods, the Company manages this risk by offering its furniture brand, “Furinbox,” affordable products with the Company’s quality standards. This caters to more cautious spending habits and mitigates the risk of price competition. The Company launched “Furinbox” zones within Index Living Mall stores to increase product variety and attract new customer segments, increasing revenue opportunities during a period of overall consumer spending slowdown.

As a result of stringent mortgage loans and the interest rate environment, the Company manages risk by focusing on the selection of reliable projects with the ability to make payments. This is done by primarily considering the financial position and payment history of clients while determining payment terms and conditions and closely monitoring payment collections to reduce default risk and maintain the Company’s liquidity.

Furthermore, the Company manages volatility risks from economic conditions and the real estate sector by diversifying its sales channels through promising online platforms to increase customer reach and reduce reliance solely on branch sales. The Company has developed and expanded comprehensive online sales channels, increased product variety, and formulated marketing plans to effectively reach target customer groups. This enhances revenue resilience and mitigates the impact of purchasing power fluctuations.

The Company manages economic volatility risk through the efficient management of product costs and operating expenses. Having its own factory enables the Company to have optimal control over costs, quality, and production processes. Therefore, the Company is able to maintain price competitiveness and mitigate the impact of raw material cost fluctuations. At the same time, the Company focuses on increasing productivity and controlling expenses to continually address cost pressures and maintain business capability under uncertain economic conditions.

4. Changes in Customer/Consumer Behavior

In 2025, consumer behavior and needs are changing rapidly due to technological advancements, digital channels, lifestyle changes, and economic uncertainty. Consumers place greater emphasis on value, price, quality, and ease of access to goods and services. If the Company fails to adjust its products, services, distribution channels, and marketing strategies in a timely manner to meet these changing demands, it could negatively impact competitiveness, customer satisfaction, and long-term operating results.

The Company manages risks from changes in consumer behavior and needs by continuously monitoring market trends and customer behavior. It then leverages digital technology and artificial intelligence (AI) to analyze customer needs, manage product portfolios, and plan marketing strategies, enabling the Company to adapt products and communications to meet market demands effectively.

At the same time, the Company recognizes the consumer trends in sustainability. Therefore, products and business models were developed to ensure the efficient use of resources, select eco-friendly materials, and adopt responsible business practices. This dedication is coupled with the development of a diverse product portfolio and the expansion of distribution channels through both branches and online platforms to increase customer reach and mitigate risks arising from changing purchasing behavior.

Climate change risk

In 2025, climate change in Thailand may indirectly impact the Company’s business operations due to increased weather variability and the likelihood of more frequent extreme weather events. This could affect production, transportation, and overall supply chain costs, including energy and raw material costs. While the Company has not yet experienced any significant direct impact or damage, Thailand’s environmental regulations and the increasing consumer awareness of sustainability may necessitate adjustments to the Company’s business operations and product offerings in the future. Failure to prepare and adapt adequately could significantly constrain its long-term business capabilities and competitiveness.

With the increasing emphasis on ESG dimensions, furniture operators, especially global exporters, face significant challenges from the environmental measures of major furniture-importing countries. Recognizing the importance of adapting its business operations and supply chain management strategies, the Company received the “Highly Commended Supply Chain Management Awards” in the Sustainability Excellence category at the SET Awards 2024. This award recognizes listed companies on the Stock Exchange of Thailand with a market capitalization between 10 billion and 30 billion baht.

Furthermore, in 2025, the Company received an AAA rating from the SET ESG Ratings by the Stock Exchange of Thailand (compared to a BBB rating in 2023). This reflects the Company’s commitment to a comprehensive sustainability framework encompassing Environmental, Social, and Governance (ESG) dimensions under the core concept of “Sustainable Living for Future Lifestyle,” aiming to create better living, society, and environment in accordance with the corporate governance for sustainable growth.

The Company continues to install solar rooftop systems, a project that began in 2018, to utilize clean energy in Index Living Mall stores, distribution centers, and factories. Currently, solar systems have been installed at 29 locations to promote sustainable energy conservation.

The Company is also participating in the Low Emission Support Scheme (LESS) from the Ministry of Natural Resources and Environment through the Thailand Greenhouse Gas Management Organization (TGO). By the end of 2025, the Company had installed 29 solar rooftop systems nationwide and is in the process of expanding further in the coming years. In 2025, the Company generated a total of 15,373 MWh of electricity from solar power, a 20.21% increase from the base year, and reduced greenhouse gas emissions by 7,197.74 tCO₂e.

The Company has also joined the Thailand Voluntary Emission Reduction Program (T-VER) by the Greenhouse Gas Management Organization (TGO) to demonstrate that two Solar Rooftop projects of Index Living Mall Public Company Limited have been successfully registered, covering a total of 14 branches.

The Company has established a clear Business Continuity Plan (BCP) while fostering sustainable business development that considers environmental dimensions. This is one of the Company's sustainability goals. An environmental management policy has been established to reduce greenhouse gas emissions through energy-saving mechanisms and the conservation of natural resources in order to promote the use of alternative energy, optimize the energy consumption of all related activities, and manage garbage and waste from the Company's value chain. In addition, the Company established policies and objectives to innovate and produce eco-products for home furnishings and home decorative items, as well as eco-friendly packaging designs that are smaller, compact, and convenient for transportation, with a reduction in plastic wrap usage to facilitate product placement, resulting in a shorter delivery cycle, and a decrease in the quantity of plastic used, all of which contribute directly and indirectly to the greenhouse gas emissions.

Risk from Fluctuations in Raw Material Costs and Other Expenses

The cost of furniture production and distribution consists of product costs, labor costs, and other expenses, including utilities, advertising, and promotional expenses. Profit margins in the industry are under pressure due to rising production costs, particularly from the increasing prices of wood and aluminum. While steel prices are on a downward trend, they remain highly volatile. Additionally, labor costs may rise as a result of government policies to increase the minimum wage, further burdening entrepreneurs with higher production expenses.

The Company closely monitored the movement of raw material and energy prices and evaluated the impact of higher costs in advance to mitigate the impact of the rising costs through a pricing review, especially furniture products that have a high proportion of particle board and all imported products in order to adjust the selling price to be appropriate while remaining competitive in the market. In addition, the Company cultivates positive relationships with its primary suppliers of raw materials. The Company works closely with the factory and supply chain to be flexible and adaptable to production in response to actual sales in a timely manner. This includes considering potential import costs and replacing imports with domestic manufacturers and suppliers.

In regard to product sourcing and procurement, the Company orders multiple products to get lower prices and confirms the cost price within six months to one year in order to mitigate risk amid cost price volatility or major currency fluctuation. The Company has a supplier contingency plan for both domestic and international suppliers to supply the same product lines as a backup plan in the event that the cost of the primary suppliers has a significant change.

The Company aims to develop and design components and fittings as common parts that can be used in a variety of products and packaging in order to obtain an order volume that can be used for cost negotiation and reducing the stock-keeping unit that requires management. This is done by ensuring that the product's functionality and aesthetics remain uncompromised and that competitive pricing and adequate margins are maintained amidst the possibility of increasing raw material expenses.

In addition, the Company intends to continuously manage and control the corporate groups' expenses in response to the increase in energy prices by installing a fuel bunker at the distribution center, which will allow the Company to save money due to lower fuel rates and a rebate from refueling. The Company has been able to reduce its electricity costs by installing solar rooftops at the factories and Index Living Mall branches in order to generate renewable electricity, modify the air conditioning systems to be more efficient and save electricity, and utilize electric vehicles for product delivery. This contributes to long-term cost savings and the reduction of greenhouse gas emissions.

Exchange Rate Fluctuations

In 2025, exchange rates are likely to fluctuate due to both domestic and international economic and financial factors, which could directly impact businesses that import goods and raw materials from abroad. Exchange rate volatility could cause product costs and operating expenses to deviate from estimated levels, increasing uncertainty in cost structures and profit margins. However, in 2025, the value of the Thai baht is likely to appreciate against some major currencies, which could positively benefit importing businesses by mitigating cost pressures arising from exchange rate fluctuations during that period.

The Company continues to have strict management of exchange rates in order to manage exchange rate fluctuation risks for imported goods and revenue from exporting to be at an appropriate level. The Company has made a natural hedge from the transaction of product sales and purchases of the Company's raw materials. This includes revising the pricing of newly imported goods to cover the cost of imports and the potential exchange rate fluctuation risks while maintaining the profit margin at a proper level. Additionally, the Company mitigated the exchange rate fluctuation risk by entering into forward contracts, which safeguarded against exchange rate fluctuations at a certain time. The Company has closely monitored exchange rate movements, established strong relationships with various financial institutions, and kept up with news and updates from banks to assess market conditions and develop strategies to mitigate potential risks.

Dependence on Major Shareholders or Affiliates of Major Shareholders or Executives

As of January 31, 2025, the Patamasatayasonthi family and Krobkrua Thammada Panich Company Limited were the major shareholders of the Company, holding 378.19 million shares, or 74.89% of the total issued shares of the Company. Therefore, there is a risk that the major shareholders, who own more than 50.0% of the Company’s shares, may influence the formulation of management policies and the checks and balances in voting on proposal agendas presented to the Shareholders’ Meeting for consideration.

The Company's management structure has been established in recognition of the importance of transparent and verifiable business operations that adhere to corporate governance which consists of the Board of Directors, the Audit Committee, and the Executive Committee. Each committee has a clearly defined scope of authority and responsibilities. Currently, the structure of the Board of Directors consists of 11 directors, 5 of whom are independent directors, and 3 of these independent directors are Audit Committee members in order to check and balance matters as well as approve any matters prior to proposing them to the Shareholders' Meeting for approval. If transactions involve directors, major shareholders, controlling persons, related businesses, or individuals who may have conflicts of interest. Such persons will not have voting rights to approve such transactions. Minor shareholders have the right to vote against an offering of securities that affects shareholders by casting only 10% of the votes cast by the shareholders attending the meeting. Additionally, transactions must be approved in accordance with the criteria of the Securities and Exchange Commission ("SEC") and the Stock Exchange of Thailand.

Investment in securities of foreign companies

None