The Directors are pleased to present the Annual Report of the Company along with the Audited Financial Statements as on 31 December 2023.

Annual Review

In 2023, the Company continued to face challenges due to the ongoing business situation in both domestic and international market. However, it can be considered a good year overall, evidenced by a significant increase in revenue from construction projects compared to the previous year. This improvement in gross profit compared to 2022 can be attributed to both increased efficiency and a lower-than-expected impact from sharp increase in construction material prices.

However, the construction industry has been in a subdued state since 2021, and this condition persists to the present day. Both public and private sector investments continue to remain subdued. Currently, there are factors that could adversely affect the construction industry, such as the delay in budget planning for the fiscal year 2024, postponed beyond the normal schedule by approximately 6 months. This delay has consequences on new government project investments in the first half of 2024. As a result, government investment in new construction projects will only begin in the third quarter of 2024.

The value of private sector construction work is still growing slowly, which aligns with the recovery of purchasing power in the Economy. However, new investments still carry a high risk of facing financial liquidity issues. Strict credit measures as well as the lack of clarity in government policy implementation, further exacerbate this situation. With the number of projects that have been developed and are ready for actual construction still limited, competition remains intense. Therefore, both domestic and foreign private sectors have expanded and diversified their investments in certain businesses, such as the electronics industry, the food processing industry, the electric vehicle (EV) industry and related equipment, hospitals, warehouses, and data centers.

The Thai economy continues its gradual recovery and is positioned among the countries with slower recovery from COVID-19, ranking globally towards the bottom. According to the analysis by SCB EIC Thai economic growth for 2023 was revised downward to 2.6%, with a projected expansion of 3.0% for 2024, down from the previous forecast of 3.5% (the Bank of Thailand forecasts economic expansion at 2.5-3.0%). This deceleration can be attributed to ongoing contraction in government spending, linked to the 2024 fiscal budget legislation. While household income remains stable, household debt levels are high. Persistent risks in the financial system stem from fluctuations in interest rates, ambiguous government investment policies, and a slower-than-expected recovery in international tourist arrivals. While private sector investment shows initial signs of revival, growth remains sluggish despite an increase in Board of Investment (BOI) approved projects.

The majority of the investments are directed towards the electrical appliances and electronics industry, followed by agriculture and food processing, automotive, and parts manufacturing. These developments are viewed as positive indicators for supporting economic growth over the next 1-2 years.

While the Thai interest rate policy, as outlined by the Monetary Policy Committee of the Bank of Thailand on February 7, 2024, remains unchanged at 2.5% to sustain long-term economic stability. This policy is expected to lead to the Thai Baht maintaining its recent strengthening trend, reaching between 32-33 Baht per US dollar in 2024.

According to the risk management and the business continuity plans, along with active cooperation from all executives and staff, the Company’s business operations were effectively conducted throughout the crises and challenges faced.

The Board of Directors and all executives are committed to good corporate governance principles. They recognize the importance of considering all stakeholders, economic, social, and environmental in line with the Company’s mission, vision, and code of business ethics. The Company continued to receive an excellent rating in the assessment of the corporate governance, a perfect score of 100 percent on the conduct of the Annual General Meetings for 5 years in year 2017 and from 2020 to 2023 by the Thai Investors Association in the Annual General Meeting of Shareholders. The Company is also classified as a company with “Excellent” rating in the assessment of the Corporate Governance Report of Thai Listed Companies (CGR) for 6 consecutive years from 2018 to 2023, by Thai Institute of Directors Association for Thai listed companies (IOD).

Company Operating Results 2023

The Company’s performance in the year 2023 saw an increase in total revenue compared to 2022, driven by higher revenue from construction projects. Additionally, there was an increase in profit margins due to increased construction revenue in 2023 and improved cost management of construction projects. Furthermore, the Company experienced minimal impact from volatile construction material prices as compared to 2022.

The Company’s cash flows were decreased due to decrease in cash flow received from operating activity. However, the Company adopted measures to maintain liquidity in order to operate the business without any disruption. One of the measures was to accelerate release of the funds stuck for long periods as work-in-progress (WIP) which is value of work done pending for approval by the clients or their consultants. WIP, once certified, gets converted to invoices which then results in receipt of funds as and when due. With this and other such measures, the Company could maintain comfortable cash balances to support its business operations. Moreover, during this time, the management also closely monitored and assessed the risks on receivables from clients to prevent any future bad debts. However, in 2023, the Company and a subsidiary took out more additional loans from financial institutions for its working capital needs. With efficient financial management, the Company’s financial liquidity remains in reasonably good shape.

Due to the uncertain political situation in Myanmar, the Company’s Board of Directors resolved to dissolve and liquidate our subsidiary in Myanmar. At present, the subsidiary is in the process of completing the company liquidation.

Bidding and Awarded projects in 2023

In 2023, the Company participated in bidding for 44 projects, with an estimated project value of THB 28,070 million and was awarded contracts for 11 projects, with a total value of THB 1,654 million. The ratio of projects won to those participated was 4:1 in terms of number of contracts and 17:1 in terms of contract value.

During the past year, the Company refrained from rushing to secure highly competitive projects by accepting contracts without gross profit margins, aiming to mitigate operational and Counterparty Credit risks. Moreover there are still backlog projects that are ongoing and being executed and so the Company is not in a desperate situation to secure projects at unreasonable prices with unreasonable terms.

Future Outlook

The global economy in 2024 is projected to expand at a slower pace of 2.5%, down from 2.7% in 2023. In 2023, global GDP growth outperformed previous expectations, revised from 2.4% to 2.7%.

The International Monetary Fund (IMF) has forecasted a deceleration in global economic growth compared to previous years, attributed to spending during the COVID-19, expenditures related to aging societies, climate change adaptation, and increasing interest burdens.

Construction industry, projects by the government sector continue to face delays due to pending budget allocation processes for the fiscal year 2024, as well as uncertainties in government investment and the overall economic situation. These factors continue to slow down private sector construction investments. However, in the year 2024, there are some projects such as Hospital, EV automotive and peripheral, Warehouse and logistics, digital, data center and food processing factory which are under development and investment expansion. However, even on these Projects there are an unusually high number of other competing contractors bidding for these projects.

improvement in the value of investment expansion for construction projects compared to the year 2023. The Company plans to compete and bid for projects valued at approximately THB 30,000 - 40,000 million. Therefore, the Company expects to have opportunities to secure projects worth THB 7,000 - 8,000 million.

As at December 31, 2023, the backlog of the Company was THB 6,771 million, a decrease of almost 40% from the end of year 2022 which was THB 11,431 million.

Renewable Energy Business (Subsidiary Company)

Notwithstanding the challenging market conditions experienced in 2022 in the construction business, it is rather fortuitous that in recognition of the huge potential in the alternate energy space in Thailand and in the wider Indochina region, and with the growing need for sustainable means of living and increased oil (and thus electricity) prices, the Company entered into the Alternate Energy Sector in the Year 2019 by setting up a subsidiary “Christiani & Nielsen Energy Solutions Co., Ltd., (CNES)”.

During the Year 2023, CNES and its wholly owned subsidiary CNESD1 have continued their usual progress and to the end of Quarter 4 of 2023, have had several additions to their portfolio. CNESD1 has completed construction of several Power Purchase Agreements (PPA) projects with reputed companies. Furthermore, CNESD1 was granted the distinction of being one of the pioneering brands promoting Power Storage Backup by integrating a 3200KVA power backup system with enhanced batteries (with C 6 rating) in its 25-year PPA Project with a reputed Company and the system was successfully operated. In this Quarter the Company is in the process of finalizing PPA Projects for 6 hotels of a reputed Hotel Group and another company in addition to 2 EPC Projects.

Construction Business of High-end Hotels and Resorts (Subsidiary Company)

In February 2023, the Company joined with Mr. Julian Olds to establish the company. Christiani and Nielsen DCM Limited (CNDCM), where the Company holds 80 percent of the shares and Mr. Julian Olds holds 20 percent of the shares. CNDCM brings over 20 years of experience in developing premium real estate and five-star hotels & resorts, particularly in Phuket, Phang Nga, Koh Samui and Chiang Mai. CNDCM continues “building on reputation” in this sector with an intensified focus on the Phuket market where our track record and presence is strongest.

According to Mr. Julian Olds, the real estate sector in Phuket has been on an impressive growth trajectory, which arguably the most prolific since it took off over two decades ago. Over the past 12 months, those who pay attention to the market would have witnessed dramatic price increases, particularly in high-demand areas. With the recovery of tourism industry, the Phuket real estate market is poised for further acceleration. A plethora of new projects is being unveiled, largely fueled by the influx of foreigners who have chosen to make Phuket their new tropical heaven. The sheer number of ambitious large-scale developments on the island is a testament to this thriving growth. Despite the rise in Phuket’s real estate prices, demand remains robust. Barring unforeseen complications, the current upward trajectory is expected to extend into 2024 and beyond.

Financial Review

For the year 2023, the consolidated financial statements of the Company and its subsidiaries show net profit of THB 19.8 million, a THB 238.3 million increase in comparison to the net loss of THB 218.6 million in the same period of the previous year. The total revenue was THB 7,249.2 million, an increase of THB 1,900.8 million or 35.5% from THB 5,348.4 million from the same period of previous year, due primarily to a THB 1,917 million increase in construction income or 36.8% of THB 5,214 million from 2022. Costs of construction, rental, and sales and services accounted for THB 6,918 million, an increase of THB 1,555.1 million or 29%. The gross profit margin increased by THB 323.3 million with increase in the percentage of gross margin from loss in 2022 of 0.61% to profit of 4.03%. This is because in 2023, there was an increase in construction income, the Company improved in managing cost of construction projects and there was less adverse effect from material price escalation compared to year 2022.

Moreover, in 2023, the Company posted net income from the rental of office space in the Company’s office building of THB 10.9 million. Also, in 2023, the consolidated financial statements of the Company and its subsidiaries show other income increased by THB 22.4 million from the recovery of the wrongdoings amount from the management team of the subsidiary and the reversal of long-standing outstanding creditor items from the accounts.

Administrative expenses increased by THB 34.2 million from that in the same period in 2022, of which THB 39 million is attributed to the newly established subsidiary in the year 2023.

There is also an increase in finance cost from more loans drawdown and interest rate increase on loans from financial institutions. This resulted in an increase in the financial cost by THB 34.6 million, due to the increase in short-term loans from financial institutions to support the subsidiary company to invest in the construction of the solar power plants and a construction project with a long credit period. In addition, there is a significant increase in the rate of interest when compared to the previous year. However, the significant increase in construction income enabled, the Company to post a net profit before income tax of THB 55.1 million, deferred tax payable and corporate tax for this period of THB 35.3 million, resulting, in the consolidated financial statements of the Company and its subsidiaries for 2023 showing a net profit after corporate income tax of THB 19.8 million, a THB 238.3 million increase from the net loss of THB 218.6 million in the same period of the previous year.

The sales and service segment by a subsidiary with operations carried out in Thailand to provide energy solutions in solar, wind and other renewable energy sectors, had revenue from sales and service for the year 2023 of THB 81 million with net loss of THB 12 million, with a decrease in net loss of THB 23 million compared to a net loss of THB 35 million in year 2022. However, taking into consideration the backdrop of the objectives of the Company to develop PPA Assets, the Company expects to generate more long-term returns.

In 2023, CNDCM participated in bidding for a number of projects and was awarded the Wellness Centre & Thai Restaurant for a major reputed Hotel Group due to complete in April 2024 and a boutique luxury villa project, both located in Phuket with a combined value of approximately THB 335 million. However, CNDCM incurred a net loss of THB 39 million because of the lower Construction Revenues resulting from low value of contracts awarded to CNDCM during the year, which resulted in the non-recovery of overheads. However, In February 2024 CNDCM has secured a THB 615 million Project for Villas and Condominium Residences in Layan, Phuket for a reputed Group.

As of the end of year 2023, the Company and its subsidiaries had total assets of THB 6,487 million, total liabilities of THB 4,810 million and shareholders’ equity of THB 1,677 million. Cash and cash equivalent as of the year ended 2023 was THB 170 million, a decrease of THB 42 million from a balance of THB 212 million at the end of 2022 or beginning of 2023 which came after net cash used in operating activities of THB 766 million, net cash used in investing activities of THB 252 million and net cash received from financing activities of THB 976 million. As of the end of year 2023, there was no adverse impact on liquidity since the Company had sufficient cash reserves. The financial liquidity or current ratio of the Company per the consolidated financial statements was 0.94, which slightly decreased compared to the end of year 2022, with the quick ratio at 0.45 which was higher than 0.40 at the end of year 2022. Return on Equity improved and increased from (12.23%) in 2022 to 1.19% in year 2023 and Return on Assets was 0.31% compared to (3.72%) in year 2022. Debt to Equity ratio was 2.87 times which increased from 2.76 times in year 2022.

Appropriation

The Board of Directors proposes to appropriate the earnings of the Company (per separate financial statements of Company only) for year 2023 as follows:

With hopeful expectations for an improved economic situation in the future, the Company extends its sincere gratitude to shareholders, customers, and all supporters who have demonstrated confidence and support. As a representative of the Company’s board of directors, we would like to express heartfelt gratitude to the management and all employees of the Company for their hard work, dedication, sacrifices, and contributions throughout the past year.

Mr. Khushroo Kali Wadia
Chief Executive Officer

Mr. Kasemsit Pathomsak
Chairman of the Board of Directors