Message from the Chairman
The Revenue of your company increased by 5.86% to Baht 392.7 million while the profits shrank by 18.66% to Baht 83.1 million. We were penalized Baht 19 million by a major customer, a financial institution, for failure to thoroughly verify the identity of several staff who were sent to them for inputting data. We are contesting the penalty and noted the amount in our financial accounts.
The fourth document storage warehouse was completed and opened for service in September 2020. So-far the occupancy rate has been satisfactory and in line with the plan.
We started a new strong room storage warehouse to meet the increasing demand. We expect to open this in the third quarter of 2021.
The 2020 Covid 19 worldwide recession was caused by imposing a partial or complete lockdown along with social distancing to contain the spread of the pandemic. This prevented people with money being able to go out and spend. The industries that suffered most were entertainment, sporting events, tourism, hotels, restaurants, pubs, bars, shops and transportation. As people, businesses and governments moved online for work, social relationships, education, shopping and entertainment, the hardware and the devices that supported these engagements boomed. The software that supported people’s daily needs for shopping, working, social relationships, medical services and entertainment saw exponential growth. Digitalization quickened as more and more people and businesses become familiar with using digital devices and software.
Those who were already digital disruptors, and those who quickly transformed to serve the new environment became even more successful. The share prices of these oversea companies increased more than 50% in one year. Some even exceeded 100%.
For the masses 2020 was a dismal year. So far the many who have lost their jobs, the many more whose income has fallen, and those with struggling businesses, are now forced to live on increasing government handouts and assistance. Almost every government has in turn increased their borrowing substantially. The IMF and the World Bank have also granted additional loans to the poorer countries to prevent social upheaval.
So long as those with money are not spending, companies will reduce their investments and the rates of interest will remain low or even negative, then there is no problem. When vaccination programmer have been completed and people can go out and spend money again, investment will return and inflation will rise at least temporarily, so will interest rates, then most governments will not be able to service the interest payment on their loans and they will then have to borrow even more money.
If so, would the rate of interest increase quikly then? Then what would happen? Hopefully the income generated by the the spending released, will be sufficient to cover the interest costs and reduce some of the government debt. Compared to the pandemic that would be a new, less serious problem for the world to tackle later this year.
The Thai economy is likely to improve gradually in 2021 after negative growth of about 7% in 2020 as more people around the world become vaccinated and the rate of infection declines.
Also, exports are likely to improve because the major economies will continue to support their poor as well as their weak industries. Substantial improvement will have to wait until people can travel internationally again, as Thailand is heavily dependent on tourism.
Longer term improvement will need more investment in human capacity building to allow most people to participate more effectively in an increasingly digital and technological world.
Sustainable growth will need the Thai Government to follow the examples of the successful leading global companies in tackling the much needed digital transformation, to greatly improve productivity and reduce the size of the government, while at the same time providing better and more personalized services to people and businesses.
Krundhep Sophon will continue to focus on and improve the quality of its core business of warehousing, document storage and helping customers to outsource their back room activities. We will continue to invest in the improvement of our processes and developing people so that we will continue to transform digitally and be relevant to our customers. We will continue to beware of the risks of being disrupted.
On behalf of the Board of Directors, I would like to thank you, our shareholders, for your continuous support. We are also grateful for the trust our customers, vendors, suppliers, banker and various stakeholders place in us. The lifeblood of our company is our managers and our staff and we are grateful to them for their commitment and loyalty.
Finally, please allow me to express our appreciation to Mrs. Acharaporn Hemakom for her gracious and diligent service to the board of directors and the company. She served on the board for 8 years, four of which were as a member of the audit committee and more recently as chairperson of the risk committee, also for about four years. In addition to this, she was acting president of the company for about 7 months. She has decided not to stand for re-election and we would like to wish her good health and happiness for the future.
( Chote Sophonpanich )
Chairman of the Board