Risk Management and Business Continuity Management

1. Risk from economic and real estate sector volatility

In 2024, the global economy faced significant volatility and uncertainty, ranging from economic slowdowns, inflation issues, and geopolitical conflicts to changes in the economic policies of major powers, all of which broadly impacted the Thai economy. Thailand's growth rate remained low compared to the ASEAN region and fell well below government projections. Although the number of international tourists visiting Thailand increased by approximately 26% compared to the previous year, tourism revenue remained significantly below normal levels. Per capita tourism income declined and was much lower than pre-COVID levels. Additionally, private consumption slowed due to tight financial conditions, high household debt, and continually declining consumer confidence. In 2024, the Thai market also experienced a surge of low-priced goods from China flooding into the country, severely affecting Thai operators, especially small businesses. In the real estate market, contraction continued due to pressures on purchasing power recovery, strict lending by financial institutions, high interest rates, and rising housing prices driven by higher construction costs and land prices.

The Company has also implemented risk management measures by enhancing business efficiency in terms of both quality and value for money, carefully selecting products that meet changing consumer needs, and managing product and operational costs. These measures have enabled the Company to achieve continuous growth and strong financial performance, as well as maintain a stable financial position. Currently, the Company has no long-term debt, which reduces the risk associated with high interest rates and rising operating costs, allowing the Company to control costs and remain competitive in the market. The Company continues to pursue its target of expanding branches in both retail operations and rental services, according to its strategic plan to cover major cities across Thailand, thereby increasing revenue and profit opportunities. In 2024, the Company opened two new branches which were Saraburi (33rd branch) and Rattanathibet (34th branch). Additionally, construction of Little Walk Rattanathibet (5th branch) has been completed and is scheduled to open in the first quarter of 2025. Opening new branches carries potential risks related to the performance of the new stores and the possibility that returns may not meet projections. The Company manages investment risk by conducting feasibility studies to inform investment decisions. Moreover, operations are controlled according to the annual budget plan, with close monitoring of branch performance. If any issues arise or performance deviates from the plan, the Company is able to adjust strategies and resolve problems promptly.

Moreover, the Company has established a product sourcing and selection plan to cover all customer segments, particularly the Mass segment, which represents a broader customer base. In a market situation where consumer purchasing trends are slowing down and low-cost Chinese products are flooding into the country, though their quality may not meet consumer expectations, the Company therefore, has introduced the furniture brand Furinbox. This brand offers affordable products while maintaining the Company’s quality standards, addressing customer needs and mitigating related risks. The Company has launched the Furinbox zone within its Index Living Mall stores, maximizing the use of existing retail space to provide a more complete product range and attract customers with affordable products. This strategy not only increases store traffic but also creates opportunities to upsell other products. Sales of Furinbox in 2024 grew significantly, reflecting the Company’s highly successful strategic plan.

In addition, the Company drives revenue growth through high-potential online sales channels. In today’s digital era, consumers seek convenience in purchasing products. The Company has expanded its online sales channels to be diverse and comprehensive, allowing consumers easy access through the website, social media, and e-marketplaces. The Company has also increased the variety of furniture and home décor products and implemented highly effective marketing strategies, including targeted advertising and promotions. As a result, online sales have achieved double-digit growth for two consecutive years, demonstrating the effectiveness of the Company’s strategic planning in generating revenue amid intense online competition. Regarding exports, the Company continues to pursue growth in international markets. At the end of 2024, the Company expanded into India by granting a franchise to Creaticity, a retail lifestyle business with over 16 years of experience, in Pune. This move aims to sustainably enhance the Company’s growth potential.

In a context where consumer spending is cautious and slowing, the Company has established guidelines for managing product costs. By leveraging the capabilities of its own factories, it can control materials and ensure globally standard quality at competitive prices, instilling customer confidence. The Company also manages operational expenses efficiently and increases productivity to achieve its objectives. Furthermore, the Company emphasizes sustainable cost management through initiatives such as installing solar rooftops to generate renewable energy at all branches, energy-saving projects to optimize electricity use, and opening the Index Living Mall Saraburi branch as a Green Retail Store, the first energy-efficient “Zero Energy Building” in Thai retail. These initiatives aim to deliver clean air, enhance quality of life, and promote sustainable environmental practices.

Regarding the retail rental business in Bangkok and surrounding areas, revenue in 2024 was relatively stable or slightly declined, particularly for Grade B and older buildings. These locations typically have lower land prices and are easier for new developments, which continuously attract new investors and intensify competition. Moreover, most tenants are medium-to-small businesses that are vulnerable to economic fluctuations, limiting the potential for rental rate increases. The Company is aware of the risks posed by continuous market oversupply. Therefore, the selection of locations for The Walk and Little Walk is a key factor. The Company prioritizes high-potential areas surrounded by residential projects and near key landmarks, with convenient access connecting multiple routes, and targeting high-purchasing-power consumer groups. In addition, the Company emphasizes building strong, ongoing relationships with business partners. This strategy ensures that The Walk and Little Walk attract leading anchor tenants, which in turn draw smaller tenants and consumers, increasing foot traffic. The Company also manages rental business costs efficiently and flexibly, adapting to tenant needs, which has resulted in higher occupancy rates compared to the previous year.

Risk arising from changes in customer or consumer behavior and preferences.

In 2024, Thai consumers were concerned about macroeconomic volatility and its potential significant impact on the country, as well as inflation. This led them to be cautious with their spending, balancing necessary expenses with lifestyle improvements while seeking the most cost-effective ways to spend. Consumers adjusted their purchasing behavior by choosing products that offer the best value without compromising quality. Environmental care remained a top priority, with many consumers opting for products certified by recognized organizations. Additionally, most consumers preferred shopping through social media platforms, where advertising has a strong influence on their purchasing decisions.

The Company has strategically planned its product selection to clearly meet consumer demand for value for money by expanding a variety of products under the Furinbox brand. These products are affordable while maintaining the Company’s widely recognized quality standards, achieving remarkable success in 2024 with a significant surge in sales. Additionally, the Company has enhanced customer convenience through comprehensive services, including design, delivery and installation, customized production tailored to individual customer needs, and full-service offerings through Home Service. Promotions, such as redeeming Joy Card membership points for discounts, further increase value for customers in multiple ways. The Company also has a policy to promote the development of eco-friendly products and packaging made from environmentally sustainable materials, energy-saving, and safe for health and hygiene, aligning with the purchasing trends of modern consumers. Sales of the Company’s eco-friendly products have been steadily increasing, and most consumers are willing to pay a premium for furniture and home décor items that are environmentally friendly.

Regarding sales channels, in today’s digital era, consumers seek convenience in purchasing products. The Company has expanded its online sales channels to be diverse and comprehensive, allowing consumers easy access to its products through the website, social media, and e-marketplaces. The Company has also increased the variety of products, including furniture and home décor items, and implemented effective marketing strategies, such as targeted advertising and promotions, to reach the desired customer segments precisely. As a result, online sales have achieved double-digit growth for two consecutive years, reflecting the Company’s effective strategic planning in generating revenue amid fierce online competition. To better understand customer needs and enhance service quality for an improved customer experience, the Company has implemented a Customer Experience system. This system integrates customer satisfaction evaluations from delivery and installation services, as well as direct active feedback from customers. Additionally, AI is used to analyze customer satisfaction based on their feedback, alerting relevant departments to address negative comments promptly. All customer data are analyzed to identify the root causes of issues, enabling the Company to make appropriate improvements.

Climate change risk

Several studies indicate that climate change will cause damage to economic systems in the future. Physical risks are those closely linked to climate change and climate-related threats. Transition risks refer to risks arising from the process of restructuring the economy toward a low-carbon model, including changes in policies, laws, technologies, and consumer preferences. These represent new challenges for Thailand in its transition to a low-carbon society, in line with the goal of achieving Net Zero Emissions by 2065 under the Paris Agreement. It is also the responsibility of the private sector to manage greenhouse gas emissions.

The Company recognizes the importance of these impacts and risks. In 2024, it developed the Green Retail Store project at Index Living Mall Saraburi as a model, the first energy-efficient retail building in Thailand and the first in Southeast Asia. The store serves as a new landmark, offering a comprehensive range of home products and services, while providing a safe environment that enhances quality of life under a Zero Energy Building design. Key features include;

1. Energy Efficiency. The store’s net energy consumption is significantly reduced. While the average energy consumption of department stores is 308 kWh/m² per year, the store achieves less than 112 kWh/m² per year, meeting the Zero Energy Building (ZEB) standard for retail buildings.
2. Safe Air Quality. The store promotes well-being for customers and staff, with PM2.5 levels close to zero, temperature and relative humidity maintained at comfortable levels, and real-time displays of air quality inside the building. Levels of carcinogenic substances (VOCs), carbon dioxide (CO₂), bacteria, and fungi remain below standard thresholds (500 cfu/m³).
3. Cost Reduction. Operational costs are lowered due to the building’s net energy consumption being below the average for typical malls. Insulated glass is used to minimize heat transfer between the interior and exterior, further enhancing energy

The Company has continued to install solar power systems (Solar Rooftop) since 2018 to replace conventional electricity with clean energy at Index Living Mall stores, distribution centers, and factories. Currently, a total of 28 installations have been completed to promote sustainable energy savings. The Company has also participated in the Low Emission Support Scheme (LESS) from the Ministry of Natural Resources and Environment, administered by the Thailand Greenhouse Gas Management Organization (Public Organization) (TGO). In 2024, the Solar Rooftop projects helped reduce greenhouse gas emissions by 7,617.73 tons of CO₂ equivalent (tCO₂e). Additionally, the Company has implemented recycling programs and converted organic food waste into animal feed, reducing greenhouse gas emissions by 6,899.04 tCO₂e. Combined, these initiatives contributed to a total reduction of 14,160.68 tCO₂e. (Note: The greenhouse gas reduction figures for 2024 are currently under certification by TGO.)

The Company has also participated in Thailand’s Voluntary Emission Reduction Program (T-VER) under the TGO to demonstrate that its Solar Rooftop projects at Index Living Mall branches have been officially registered—two projects covering a total of 14 branches. With increasing ESG requirements, furniture businesses, especially exporters worldwide, face significant challenges from environmental regulations in countries that are major importers of furniture. The Company recognizes the importance of adapting its business operations and has adjusted its supply chain management strategies accordingly. This earned the Company the “Highly Commended Supply Chain Management Awards” in the Sustainability Excellence category at the SET Awards 2024, for listed companies with a market capitalization between THB 10,000 million and THB 30,000 million. Additionally, the Company received the SET ESG Ratings “AA” Sustainable Stock Award in 2024 from the Stock Exchange of Thailand, marking a two-level leap from 2023 when it was first recognized as a sustainable stock with a BBB rating. This rating reflects the Company’s strong commitment to comprehensive sustainability, covering environmental, social, and governance (ESG) aspects under the core concept of “Sustainable Living for Future Lifestyle”, aiming to enhance quality of life, society, and the environment while promoting good governance for sustainable growth.

Moreover, the Company has prepared to respond to potential natural disasters through a clear Business Continuity Plan (BCP) and sustainable business development that considers environmental aspects, which is one of the Company’s sustainability goals. An environmental management policy has been established to reduce greenhouse gas emissions through energy and natural resource efficiency, support the use of renewable energy, and optimize energy-related activities. This also includes managing waste and by-products across the Company’s value chain.

In addition, the Company has policies and targets for developing new eco-friendly products, including furniture and home décor, as well as environmentally friendly packaging. The packaging is designed to be smaller, more compact, and easier to transport, with reduced use of plastic wrap. This helps decrease the space required for product storage, reduces the number of transportation trips, and lowers both direct and indirect greenhouse gas emissions associated with plastic use.

Risk arising from fluctuations in raw material costs and other expenses.

The cost structure of the furniture manufacturing and retail business consists of the cost of goods, labor costs, and other expenses, including utilities, advertising, and sales promotion. Profit margins in the business are likely to be pressured by rising production costs, driven by higher prices for wood and aluminum. Although steel prices are trending downward, they remain highly volatile. Additionally, labor costs may increase in line with government-mandated minimum wage adjustments, which will result in higher production costs for operators.

The Company closely monitors movements in raw material and energy prices and assesses the impact of rising product costs in advance to identify measures to mitigate the effects of cost increases. This includes reviewing product prices, particularly furniture items with a high proportion of particleboard and imported products, to consider appropriate price adjustments while remaining competitive in the market. The Company also maintains strong relationships with key raw material suppliers and engages in proactive production planning between factories and the Supply Chain department. This ensures flexibility in adjusting production to align with actual sales, while carefully controlling potential import-related costs and seeking domestic manufacturers and suppliers as alternatives to imports. In product sourcing and procurement, the Company also conducts careful supplier selection and purchasing management.

The Company consolidates purchases from suppliers to achieve larger volumes, allowing for lower prices and securing the original cost for a period of 6 months to 1 year. This helps reduce risks during periods of raw material price volatility or significant currency fluctuations. Additionally, the Company has prepared alternative suppliers both domestically and internationally for the same product categories, providing options in case the costs from primary suppliers change significantly.

The Company also focuses on product development and design to use shared materials, components, and packaging types, enabling larger order volumes that allow for better cost negotiation and reducing the number of SKUs to manage. Product design adjustments are made carefully to ensure functionality and aesthetics are maintained, while keeping costs competitive and margins at appropriate levels in the event of rising raw material prices.

Furthermore, the Company has continuously planned and managed group-wide expenses to accommodate rising energy costs. Measures include installing fuel bunkers at distribution centers, allowing cost savings from better fuel rates and receiving rebates. The Company also reduces electricity expenses by utilizing the rooftops of factories and Index Living Mall branches for Solar Rooftop installations to generate renewable electricity. Air conditioning systems have been upgraded for higher efficiency and energy savings, and electric vehicles have been adopted for product deliveries, helping reduce costs and long-term greenhouse gas emissions.

With the current business trend increasingly relying on technology, the risk of cyber threats has grown. Escalating cybersecurity issues, such as system failures or personal data breaches of customers, theft of critical information, unauthorized data modification, or phishing attacks, can compromise the security of customer and stakeholder information and negatively affect the Company’s reputation and image.

The Company has enhanced its information and IT system security by establishing action plans to respond to potential cyberattacks, monitoring, and issuing alerts in case of data breaches or cyber threats. To further strengthen the security of its core IT systems, the Company has migrated servers to the cloud for system operations and implemented regular internal and external audits of IT infrastructure controls. Dedicated IT personnel are assigned to monitor operations and address potential issues at all times. The Company also plans to continuously source and develop up-to-date hardware and software systems to counter emerging forms of cybercrime and prevent unauthorized access to data.

The Company has implemented security systems on computers to prevent potential damage from cyber threats. It also conducts organization-wide communication and training to raise awareness and understanding of cybersecurity, personal data protection, and the proper handling of customer information. Regular cybersecurity vulnerability management is carried out to prevent incidents that could lead to cyberattacks. This includes conducting information system penetration tests and assessments by experts to identify weaknesses and improve the efficiency of internal IT systems. The Company also performs cybersecurity incident management tests to handle and minimize damages from cyberattacks, while evaluating and analyzing root causes, observations, and recommendations to prevent similar incidents in the future.

Financial Risk

Exchange Rate Volatility In 2024, the Thai Baht remained highly volatile due to continued domestic structural weaknesses, while the Thai economy faced underlying structural challenges. This volatility persisted even as the global economy entered a downward interest rate cycle toward the end of 2024. The Company faces direct impacts from financial market uncertainty, affecting the value of imported goods, costs of imported raw materials and products, as well as revenues from overseas sales and franchise royalties from Company-operated stores.

The Company continues to strictly manage foreign exchange risks to maintain exposure at an appropriate level. Measures include implementing a natural hedge through the Company’s sales and raw material purchasing transactions. Pricing of newly imported products is regularly reviewed to cover import costs and exchange rate fluctuations while maintaining an appropriate profit margin. Additionally, the Company manages exchange rate risk by entering into forward contracts for foreign currencies to mitigate the impact of currency volatility during certain periods.

The Company closely monitors foreign exchange movements and maintains strong relationships with financial institutions. It also regularly follows news and information from banks to assess situations and mitigate potential risks. The Company’s retail customers are divided into three main groups:

1. Individual customers – in-store and online customers who primarily purchase products in cash.
2. Domestic project customers
3. International customers – customers purchasing in large quantities from overseas.

For groups 2 and 3, the Company may consider providing credit where appropriate, based on performance, financial position, and repayment ability, to reduce the risk of non-payment. Since these customers typically have long production and delivery cycles, receivables are secured through instruments such as guarantee letters and Letters of Credit. As of December 31, 2023, and 2024, outstanding receivables amounted to XX Baht and XX Baht, respectively, mostly from project customers. The Company has assessed repayment terms and made adequate and appropriate provisions for doubtful debts.

Dependence on major shareholders or affiliated companies of major shareholders or executives

As of January 31, 2024, the major shareholders of the Company are the Patmasatyasanthi family group and Thammada Panich Family Company Limited, holding a total of 378.19 million shares, representing 74.89% of the Company’s total issued shares. Therefore, other shareholders face the risk that a group of major shareholders holding more than 50% may influence management policy decisions, including voting power on matters proposed by the major shareholders at the shareholders’ meeting. The Company recognizes the importance of managing its business with good governance, transparency, and accountability. Accordingly, it has established a management structure comprising the Board of Directors, the Audit Committee, and the Executive Committee, with clearly defined responsibilities and authority for each body.

Currently, the Company’s Board of Directors consists of 11 members, of which 5 are independent directors. Among them, 3 independent directors serve on the Audit Committee to oversee, balance decision-making, and review and approve matters before presenting them to the shareholders’ meeting. In addition, in cases involving related-party transactions with directors, major shareholders, controlling persons, related entities, or potentially conflicting parties, such persons are not entitled to vote on the approval of such matters. Furthermore, in the case of proposals that may affect shareholders, minority shareholders have the right to object with just 10% of the votes of shareholders attending the meeting. All approvals must also comply with the regulations of the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET).

Investment in securities of foreign companies

None