Page 171 - CRC_One Report 2021_EN

Business Overview and Performance Corporate Governance Financial Statements Enclosure

The Company’s key financial risks are detailed as follows:

8.1 Foreign Exchange Risk
Exchange rate volatility is unpredictable factor due to various factors that affects the movement of the exchange rate,
including fundamental economic factors in that country, monetary and fiscal policy, world economy, forecasting
and speculation, stability of domestic and international politics, market psychology, various rumors and technical
factors. The fluctuation of the exchange rate may arise the risk to Central Retail due to subsidiaries in Vietnam and
Italy recognize sales volume and cost of goods sold in Vietnamese Dong and Euro, respectively. Central Retail’s
assets and liabilities are also shown in foreign currencies, mainly consisting of Euro and US dollar. Although Central
Retail is unable to control the fluctuation of exchange rates, it can manage foreign exchange risk by using various
appropriate tools including the revenue and expenditure management in the same currency (Natural Hedge)
to minimize foreign exchange risk and for effective income and costs management.

8.2 Interest Rate Risk
As of 31 December 2021, Central Retail may encounter the interest rate risk due to its loans. Central Retail reduced such
risk by determining its fixed loan interest rate. As of 31 December 2021, Central Retail’s loans mainly consisted of
short-term loans from financial institutions of 35,632 million Baht, including promissory notes, packing credit,
letter of credit and trust receipt, which is due by 2022, with interest rate between 0.60% - 4.00% per year, and long-term
loans of 28,517 million Baht from several financial institutions both in domestic and overseas as well as
the current portion of long-term loans of 13,418 million Baht, which has the due date as specified in agreements with
a maximum of 10 years ending in December 2029 and interest rate between 1.35% - 5.85% per year.

8.3 Credit Risk
Central Retail is exposed to risk from customers or contractual parties who are unable to pay debts to the Company as
agreed and upon maturity due to COVID-19 pandemic which was partially affected the revenue of their business
and household income.

Central Retail has a credit policy and regularly controls such credit risk by analyzing financial position of all customers
requesting loans for a specified amount. As of 31 December 2021, the Company had no significant credit risk.

8.4 Liquidity Risk
Liquidity risk means risk from Central Retail ’s inability to meet the short-term debt obligation. However,
Central Retail has set guidelines to mitigate liquidity risks by appropriate managing of short-term and
long-term sources of funds to have sufficient liquidity to operate the business and supports the repayment of debts
and various obligations when it due or when recall. Moreover, Central Retail has regularly reviewed
and monitored all investment projects as well as appropriate inventory management at efficient level, and
maintained sufficient cash and cash equivalents for its operations to reduce the impact of cash flow fluctuation.

(9) Emerging Risk from Epidemic

During the past, the situation of the COVID-19 has rapidly spread and expanded to many countries.
The severe COVID-19 pandemic posed a sharp increase of infections and deaths worldwide. As a result,
government in many countries imposed strict measures to control travelling both domestic and across the countries,
including the stores closure and the suspension of economic activities that posed a risk of transmission.
This has severely affected the economy in all sectors such as tourism, hotels, aviation, or even retail.

Annual Report 2021 (Form 56-1 One-Report) 171