Management Discusscion and Analysis

Analysis of Operational Performance

Net Profit

Ending on December 31, 2016, the Company and its affiliates achieved a total net profit of Baht 36.71 million, a rise of Baht 145.92 million or 133.61% compared to the performance in 2015, posting a total net loss of Baht 109.21 million. The splendid achievement can be explained by the following key factors.

Revenues from Sales and service

According to the performance in 2016, the Company projected a total revenue of Baht 2,619.84 million, increased by 20.65% or Baht 448.39 million compared to the previous year’s total revenue of Baht 2,171.45 million, thanks to the increasing sales of steel products valued Baht 260.23 million, a rise of 21.53% influenced mainly by the increase of sales and selling prices. Additionally, the Company’s affiliates acknowledged a fruitful income of Baht 1,148.26 million, basically coming from the increasing volume of electricity distribution. In 2016, the affiliates had generated its strategic expansion of production capacity dated December 31, 2016. The affiliates were able to accomplish the distribution of power supply for nine government-regulated projects, one in Thailand and the others in foreign countries. For those large-scale investment projects, the total production capacity was estimated at 13.04 megawatts. The affiliate also obtained remarkable incomes from the management of two project development tasks, supported by the power production capacity of 28.25 megawatts, and the sales of high-quality equipment used for solar power production.

Sales and Service Costs

In 2016, the Company possessed sales and service costs of Baht 2,245.84 million, an increase of 10.80% or Baht 218.91 million compared to 2015. Such value was consistent to the increase in sales of steel products influenced by the growing demand for steel billet products. Similarly, the affiliates were aware of their sales and service costs of Baht 839.85 million, resulted mainly from the depreciation cost as well as project development and construction costs, complying with the increasing volumes of electricity distribution and service allocation.

Gross Profit

For the year ended 31 December 2016, the Company achieved its gross profit of Baht 374.00 million, considered 14.27% of the Company’s total revenue, increased by 114.50% compared to the same period of the previous year.

Sales Expenses

The Company projected sales expenses of Baht 30.38 million by December 31, 2016, a rise of 8.42% or Baht 2.36 million compared to the sales expenses occurred in 2015. Due to a significant increase in sales, expenses of transportation, delivery, and other related requirements were inevitable.

Administration Expenses

By the end of 2016, the Company posted Bath 266.91 million of its administration expenses, an increase of Baht 23.85 million or 9.81% compared to the amount generated last year. As a result of the affiliates’ dynamic recruitment of qualified personnel, the increasing administration expenses were expected to strategically support the expansion of renewable energy projects.

Financial Costs

For the financial costs, the Company generated Baht 113.13 million by the final date of the previous year, a decrease of 23.34% or Baht 36.40 million compared to the value existed in 2015, thanks to the Company’s reduction of the average loan interest rates.

Financial Analysis

Total Assets

The Company’s total assets in 2016 and 2015 were estimated at Bath 13,232.35 million and Bath 8,092.36 million, respectively. The total assets, dated December 31, 2016, consisted of Bath 1,426.33 million of trade receivables, Baht 1,086.59 million of project costs during the development, Bt2,906.20 million of pledged bank deposit, and Bath 5,187.10 million of land, building, and equipment. Obviously, a massive increase is resulted from the expansion of renewable energy projects.

Total Liabilities

At the end of 2016 and 2015, the Company posted its total liabilities of Bath 11,880.22 million and Bath 6,780.03 million, respectively. On December 31, 216, the Company’s total liabilities were caused by overdrafts and short-term loans approved by financial institutions valued Bath 5,593.79 million and long-term loans obtained from financial institutions worth Bath 5,801.50 million, used for the investment of renewable energy projects.

Total Shareholders’ Equity

By the ending date of 2016 and 2015, the Company acknowledged its total shareholders’ equity of Bath 1,352.13 million and Baht 1,312.33 million, respectively. The increase of the shareholders’ equity was achieved by the Company’s outstanding performances, particularly the 5% legal reserve proportion of the net profit in compliance with the Public Limited Companies Act.

Auditor’s Remuneration in 2016

In 2016, the Company had paid a total amount of Baht 1.12 million.

Other Service Costs

The Company and its affiliates had obtained no use of other services from the audit company.