Message from Chairman
The overall outlook of theconstructionbusinessin2017hassloweddowncompared with 2016, due to the fact that certain infrastructure projects of the government have been delayed, while private sector projects did not increase all that much. The real estate business can be expanded at a rather limited pace in the middle and upper markets, especially in Bangkok and vicinity. This has called for a competition between major and medium-sized contractors who wish to take on projects. In 2017, the Company participated in the bidding of several construction projects owned by the public and private sectors, whereby the Company won10projects, worthof8.16billion Baht (7.14billion Baht for the governmental projects and 1.02 billion Baht for the private sector projects). Once combined with the existing projects upon revenuerealizationin2017, the backlog at the beginning of 2018 amounted to 14.5 billion Baht, which will be realized in the upcoming years. The Company’s overall operating performance in 2017 has improved from 2016. The total revenue stood at 8.4 million Baht, increasing by 56.3% with the net profit of 1.11 billion Baht, or 0.89 Baht per share. This has been contributed by the divestment of Bumrungmuang Plaza Co.,Ltd. (BMP); a subsidiary, for 1.05 billion Baht, equivalent to 12.5% of the total revenue. Meanwhile, the construction business, which is the core business of the Company, generated total revenue of 7.3 billion Baht, increasing by 37.1% compared to 2016, with the net profit of 147.1 million Baht, or equivalent to 0.12 Baht per share.
The Company’s total revenue from the construction business increased from 2016,but is still lower than the target, with the gross profit of 9.4%, which is slightly lower than that of 2016. Meanwhile, net profit in 2017 decreased by 52.8% from 2016, mainly due to the provision of guarantee burden for Techner Co., Ltd. amounting to 165.9 million Baht, resulting from the Central Administrative Court’s judgment, and the case is being considered by the Supreme Court. The Company’s administrative expenses compared with the total revenue from the construction business has dropped from 7.1% in 2016 to 4.96% in 2017, while the overall administrative expenses dropped from 8.9% to 6.1% in 2017, driven by continuous improvement of work processes. Furthermore, financial costs have significantly decreased; financial cost of the construction business dropped from 3.16% in 2016 to 1.93% in 2017, and that of the Company’s overall business dropped from 3.18% to 1.6% in 2017, due to higher rate of revenue collection, and the divestment of BMP to new investors for 2.1billion Baht. This amount of money was disposed of for debt settlement of BMP owed to financial institutions and used as the Company’s working capital. At the end of 2016, the Company’s cash flow and cash equivalents have increased from 333.70 million Baht in 2016 to 2.01 billion Baht in 2017, increasing by 502%.
The overall operating performance in 2017 has improved. Apart from the revenue generated from the construction business, the divestment of a subsidiary, BMP (which has been experiencing significant losses over the past several years and has always been the Company’s financial burden), has improved the consolidated financial statement and generated cashflow to dispose of as working capital in the business. In the consolidated financial statement, assets increased from 26.15% in 2016 to 9.04 billion Baht in 2017, while total liabilities only increased by 9.02% from 6.16 billion Baht in 2016 to 6.72 billion Baht in 2017. Shareholders’ equity increased from 997.5 million Baht in 2016 to 2.31billion Baht in 2017, with the retained earnings of 209.9 million Baht. For the separated financial statement, the assets increased by 18.75% to 9.4 billion Baht, while total liabilities increased by 18.83% to 7.16 billion Baht, and shareholders’ equity increased by 18.48% to 2.24billion Baht. The retained earnings amounted to 139.67 million Baht. The Company has adjusted the capital base as targeted, allocating 170 million capital injection shares for 5 investors in a private placement arrangement, increasing the paid-up capital from 1.192billion Baht to1.362 billion Baht, which is adequate and appropriate for the Company’s construction business. This also allowed the debt to equity ratio to improve, earning trust and support from financial institutions and the Company’s business partners on a continuous basis.
The Company does realize the need to keep improving the construction business, which is the core business of the Company, especially human resources, which must be trained both on technical expertise and management skills for higher efficiency and effectiveness, together with the incorporation of new technology in the work and the procurement of modern equipment and machinery to facilitate the processes as well as improving and supporting Supply Chains. These are the tasks to be executed in 2018 and many more years to come, in preparation for the Company’s participation in the bidding of large-sized infrastructure projects of the government, valuing over hundred thousands billion of Baht. The Company can participate in the bidding on its own or seek alliances in order to increase the potential in securing the projects.
The Board of Directors is well aware of the fact that the operating performance in 2017 has improved as a result of support from all stakeholders, both from staff members and the management team, who have given their best efforts to achieved effectiveness and efficiency in every area, with adherence to the principle of corporate governance. For partners, financial institutes and shareholders who have given consistent support to the Company, which will contribute to the Company’s sustainable growth and prosperity, the Board of Directors would like to extend gratitude towards all stakeholders who have given support to the Company all along.
(Mr. Swake Srisuchart)
Chairman of the Board