4. Management Discussion and Analysis (MD&A)
4.1 Operating Performance Analysis and Financial Position
Operating Performance Analysis
Operating results for the year ended December 31, 2022, the Company and its subsidiary had a loss of 132.83 million baht, the loss increased by 102.46 million baht due to the loss on impairment of solar cells 135.18 million baht. The subsidiary has partially replaced solar cells to improve the performance of electricity generating and increase revenue from sales of electricity. Excluding this transaction, the Company and its subsidiary had operating profits of 3.83 million baht. The changes in the period can be summarized as follows:
from the previous year. The key changing items are as follows:
Revenue from sales and services of the Company and its subsidiary was 1,013.32 million baht, an increase of 54.64 million baht from the previous year or 5.7%.
The economic situation in 2022 has begun to recover driven by the ease of Coronavirus 2019 (COVID-19) pandemic. Most business sectors and infrastructure projects have resumed normal operations, hence stimulating consumption and new investment. The Company has been able to deliver its pending backlog. However, highly volatile currency exchange rates have push high impact to material cost such as resin, glass fiber, steel, solar panels and solar power generation equipment, etc. Therefore, the Company has deployed forward contracts to control product costs as much as possible.
Revenue from sales and services of the Company was 872.11 million baht, increased by 93.44 million baht. Revenue from water management solutions products was 501.97 million baht, decreased by 7.24 million baht from previous year. Revenue from building materials products was 206.64 million baht, increased by 93.42 million baht from previous year. Revenue from solar rooftop products was 163.50 million baht, increased by 7.26 million baht from the previous year. The Company’s gross profit was 209.93 million baht, increased by 47.30 million baht from the previous year or gross profit margin of 24.1%, higher than that of previous year 3.2% as a result of the strict trade discount and cost control throughout the supply chain.
Infinite Green Company Limited, a subsidiary operating solar power generation business, had revenue from electricity sales increased by 1.70 million baht due to the increase of electricity prices from the Ft adjustment, while the electricity generating units decreased from the deterioration of equipment performance and the lower irradiation. Cost of sales was 83.23 million baht, decreased by 0.72 million baht due to lower depreciation. The gross profit was 102.80 million baht, increased by 2.42 million baht, a gross profit margin of 55.3%. In the past year, the subsidiary has partially replaced solar cells to improve the performance of electricity generating and increase revenue from sales of electricity. Therefore, the subsidiary recorded loss on impairment of solar cells in the amount of 135.18 million baht.
Distribution cost amounted to 154.90 million baht, wholly from the Company, decreased from the previous year 2.71 million baht from decrease of sales and marketing personnel expenses. Distribution cost as percent to revenue from sales and services was 17.8 percent, decreased from the last year that was 20.2 percent.
Administrative expenses of the Company and its subsidiary amounted to 149.56 million baht, a decrease of 1.05 million baht from the previous year. Mainly from, decrease personnel expenses, donations, and insurance premiums.
Other incomes of the Company and its subsidiary amounted to 7.21 million baht, an increase of 3.16 million baht from the previous year from the sale of carbon credits and scrap materials.
Finance costs of the Company and subsidiary amounted to 4.26 million baht, a decrease of 0.93 million baht from the previous year due to decreased loan amount.
Impairment loss determined in accordance with TFRS 9 amounted to 6.15 million baht, an increase of 4.36 million baht from the previous year mainly from a provision for overdue payment of GRC customer whose their construction projects have been interrupted and affected financial liquidity.
In 2022, tax revenue amounted to 1.73 million baht, was from deferred tax income of the Company and subsidiary.
Net loss of the Company and subsidiary in 2022 amounted to 132.83 million baht, loss increased by 102.46 million baht from the previous year mainly due to the loss on impairment of solar cells of the subsidiary in the amount of 135.18 million baht that was a non-cash expenses and did not affect cashflow of the subsidiary.
4.2 Factors or events that may affect the financial position or operations significantly in the future (Forward Looking)
In 2023, the sign of economic recovery has been more prominent. The investment projects that were previously slow down have been able to resume their operation and have positive support to the infrastructure construction project both government and private investment projects such as real estate business. Therefore, the company will focus on the delivery of various construction projects which postponed the delivery from the previous year to complete by focusing on marketing and sales of products for water management, hygiene related marketing wastewater treatment to protect the environment Including large building customers who need to renovate and improve the wastewater treatment system and reuse water such as condominium projects that are old, etc. and expanding the target group to cover industries across the country, including the opportunity to expand the water reserve system in drought-affected areas, which are expected to become more severe.
Construction material products for various projects that still focus on customer groups in investment projects that have started to recover from the slowdown of projects in the previous year, such as government infrastructure nationwide, private real estate projects and construction of large buildings especially glass fiber reinforced concrete (Glass Reinforced Concrete), including noise barrier and concrete substitution products.
Solar Rooftop products still have many business opportunities according to government policies that support alternative energy production for energy security. The investment promotion makes the investment become attractive to private sector. In addition, the policy to promote sales of electricity from household sector to the government will be a positive factor for the company to expand the household market and awareness of public sector that tend to use more clean energy in effort to reduce global warming effects and reduce carbon gas emission.