In 2019, several countries around the world were facing chaos for example:

• In June 2019, Hong Kong started protest against plans to allow extradition across boarder. It became democracy protest and severely impacted on Hong Kong’s economy.
• Brexit or British exit refers to the UK leaving the European Union (EU). There were requests to extend the Brexit deadline many times in order to prevent Brexit with “unequivocal and unconditional”. The last deadline allowed by EU was extended to January 31, 2020. The situation was seriously impacted on economic.
• During the year of 2019, U.S.- China trade war has started and extremely impact on many countries’ economic as well as on the world’s economic. The trade war expanded into tax, technology, exchange rate and investment issues. However, in December both China and U.S. have negotiated to stop trade war but many people though that it is just a temporary halt.

Thai Economy in the year of 2019 was contracted in many parts especially in real estate industry due to the low domestic expenditure. The Government’s policy that strictly governed financial institution loan was the major cause. In addition, manufacturing industry was contracted as well due to trade barrier, the slowdown of the global economy and appreciation of Thai Baht.

In 2020, the coronavirus (COVID-19) pandemic has evolved and spread to other countries around the world. As a result, economics of each country has been highly impacted. Travel bans have been implemented in the last quarter of the year and the pandemic seemed to be under control accordingly. However, a new emerging phrase or the second wave has begun across the globe. Therefore, many countries have to remain closing their border and denying travelers, even though they were almost ready to resume earlier.

At the end of the year, United States presidential election was arranged. Nonetheless, the new leader has not made any significant action according to his policy yet as there were protest against the election result and outbreak of coronavirus(COVID-19) at the same time.

The domestic economy has been impacted by the outbreak of coronavirus (COVID-19) as well. Many business activities were temporary paused in order to control the spread of pandemic, while some business needed to be closed permanently. The travel sector which is the main country’s revenue, has been impacted severely and others business within the country also faced the same situation.

As at December 31, 2020, the Company had total assets in the amount of 14,685.71 Million Baht, increased from the total assets as at December 31, 2019 in amount of 1,332.06 Million Baht.

Significant changes in assets:

1. Cash and cash equivalents as at December 31, 2020 amounting to 1,170.24 Million Baht, increased from December 31, 2019 in amount of 573.36 Million Baht as the Company’s group received the advance payment for construction cost according to the conditions defined in the construction contracts.

2. Trades receivable and other receivables as at December 31, 2020 before deducting allowance for doubtful accounts amounting to 2,794.67 Million Baht, increased from December 31, 2019 in amount of 448.12 Million Baht. In case payments are not made by the clients as it is specifically due, interest charges shall be applied to those late payments. Interest charges shall be conditionally calculated based on the due date and this standard shall be practically applied to all receivables, including receivables of related parties. Because of the current economic circumstance, the Company has conceded the interest charges to those receivables with trivial late payment, except those receivables which have been under litigation process for debt repayment.

The Company recorded allowance for doubtful accounts for all those receivables with over-12-month overdue payment according to the Company’s rules and policies.

Trade receivables as at December 31, 2020 compared with those as at December 31, 2019 are as follows;

(Unit: Million Baht)

3. Contract assets as at December 31, 2020 before deducting allowance for expected credit losses amounting to 5,068.68 Million Baht, increased from December 31, 2019 in amount of 924.39 Million Baht. The assets emerged from the contract, are as follows:

4. Inventories as at December 31, 2020 amounting to 895.64 Million Baht, decreased from December 31, 2019 by 431.76 Million Baht. The increased amount was from pre-cast concrete product that waiting for handover to the buyers.

Significant changes in liabilities:

1. Bank overdrafts and short-term loans as at December 31, 2020 amounting to 3,044.35 Million Baht, increased from December 31, 2019 in amount of 874.91 Million Baht due to the increasing of short-term loan from financial institutions in order to enhance more liquidity for the Company’s operation.

2. Trades payable and other payable as at December 31, 2020 amounting to 2,241.95 Million Baht, increased from December 31, 2019 in amount of 200.73 Million Baht.

Details of trades payable and other payables were as follows:

(Unit: Million Baht)

3. Debt initiated from contracts consists of advance revenues for construction cost in the amount of 2,957.03 Million Baht as at December 31, 2020, increased from December 31, 2019 in amount of 990.02 Million Baht. The debt was incurred from signing construction contract and receiving advance revenues for construction cost from the project owners. The advance revenues will be gradually deducted from the value of works delivered in each period. The conditions applied as specified in the construction contracts.

4. Long-term loans from banks which appeared in the statement as “Current portion of long-term loans from banks” and “Long-term loans from banks, net of current portion”, have the total amount as follows:

(Unit: Million Baht)

5. x: The Company has redeemed the debenture in the amount of 1,720.10 Million Baht on August 28, 2020. The debenture has been paid in full amount.

1. Analysis of the operating results of the year 2020 comparing to the year 2019 according to the consolidated financial statement

2. Operating result for the year 2020

3. Management discussion and analysis

For the operating results as at December 31, 2020, the Company and its subsidiaries had total revenues amounting to 9,928.95 Million Baht, divided into revenue from construction service of 7,728.59 Million Baht, revenue from sales and services of 2,130.23 Million Baht and other revenues of 70.13 Million Baht. Compared to the year 2019, total revenues of the Company and its subsidiaries increased by 2,107.04 Million Baht or 26.94 percent, resulting from an increase in construction revenue in the amount of 1,410.37 Million Baht or 22.32 percent and increase in sales and services revenue in the amount of 708.37 Million Baht or 49.82 percent.

In 2020, the Company had net loss of the year attributable to shareholders’ equity amounting to 240.92 Million Baht. While in 2019, the Company had net loss of the year attributable to shareholders’ equity amounting to 515.22 Million Baht.

The Company recognized share of loss from investment in associated companies and joint ventures in the year 2020 amounting to 18.13 Million Baht. While in 2019, the Company recognized share of profit from the said transactions amounting to 12.90 Million Baht. Details of which were as follows:

(Unit: Million Baht)

In the year 2020, the Company faced many problems and obstacles. Starting from the outbreak of coronavirus (COVID- 19) which severely impacted domestic and international economic, including foreign worker’s migration. Construction projects of the Government aiming to develop the country have begun bidding according to the budget. Although, there are serious bidding competition between construction companies is drastic, the Company’s executives and all employees are committed to perform their duties at full capacity and do their best to overcome those problems and obstacles.

3.1 Operating results for the year 2020

Construction business

In 2020, revenue from construction services was 7,728.59 Million Baht, increased from the year 2019 in the amount of 1,410.36 Million Baht or 22.32 percent. The project cost has been adjusted because of the delay in handing over the project’s area from the project owner, the problem of overlap projects and the revision on construction drawing which lead to the suspension in construction process. In 2020, the problem has been resolved. Many projects have been completed and there are many projects pending for contract signing which revenue will be recognized accordingly. The three largest construction projects contributing highest revenue in the year 2020 are as follows:

A. Structuring and providing architecture services for the Pink Line Monorail (Khae Rai- MinBuri Section) of Mass Rapid Transit Authority of Thailand in which the Company is a sub-contractor of Sino-Thai Engineering and Construction Public Company. The project revenue in the year of 2020 was 1,398.59Million Baht.

B. Structuring and providing architecture services for the Yellow Line Monorail (Lat phrao – Samrong Section) of Mass Rapid Transit Authority of Thailand in which the Company is a sub-contractor of Sino-Thai Engineering and Construction Public Company. The project revenue in the year of 2020 was 1,300.76 Million Baht.

C. Construction of Manhole and Underground Duct Bank in conjunction with the MRT Pink Line Project (Khlong Prapa- Min Buri) of Metropolitan Electricity Authority in which the Company is a sub-contractor of Sino-Thai Engineering and Construction Public Company. The project revenue in the year of 2020 was 439.80 Million Baht.

Other businesses

In 2020, revenue from sales and services was 2,130.23 Million Baht, increased from the year 2019 in the amount of 708.37 Million Baht or equivalent to 49.82 percent. Source of sales and services revenue are as follows:

1. Revenue from concrete products was sharply increased in the year 2020 with the attribution of subsidiary company called Advance Prefab Company Limited. The main business of the subsidiary is manufacture of concrete products where the sale and services revenue is significantly higher than it was in 2019, mainly contributed by the electric rail transportation project.
2. Processed steel business
3. Petrol business
4. Food business
5. In 2020, the revenue from real estate development business has decreased 25.40 Million Baht or 5.98 percent in comparison with the year 2019. The major causes are from the economic downturn due to the outbreak of coronavirus (COVID-19). In addition, the cost of real estate development business in year 2020 has increased from the year 2019 in equivalent to 11.36 percent because of the transferring asset of Baranee Park on” Romkloa Road, Bangkok was increased, where the cost of this project is higher than other projects.

Sales and distribution expenses

Compared with the year 2019, sales and distribution expenses of the year 2020 increased 16.85 Million Baht, or approximately 12.07 percent. Details of sales and distribution expenses were as follows:

(Unit: Million Baht)

For the year 2020, Mana Patanakarn Company Limited, conducts real estate business, has lower expenses on marketing promotion compared with the year 2019. Advance Prefab Company Limited, conducts concrete product business, has increased its transportation expenses due to the high sale volume compared with the year 2019.

Administrative expenses

Compared with the year 2019, administrative expenses of the year 2020 decreased in amount of 77.19 Million Baht, or approximately 13.12 percent. Details of administrative expenses were as follows:

(Unit: Million Baht)

In the year 2019, the Company has a higher lawsuit expense for outstanding debtors compared with the year 2020. Moreover, the Company was gradually recognized the expense for severance pay which the compensated rate has adjusted from 300 days to 400 days. Another cause was the recognition from the loss of exchange rate. The law, officially called the Labour Protection Act., has increased the severance pay from 300 days to 400 days for workers serving over 20 years. The Company and subsidiaries were gradually recognized and recorded the compensation rate in costs and expense as follows:

(Unit: Million Baht)

Issuance and offering of 1,720.10 Million Baht debentures, including redemption of debentures on maturity date

On August 28, 2017, the Company issued and offered 2,000,000 units of 3-year debenture at a par value of 1,000 Baht each, totaling 2,000 Million Baht with maturity date of full redemption on August 28, 2020. The debentures bear coupon rate of 4.50 percent per year. The purposes of debenture issuance were for investment, debentures repayment and using as working capital. The debentures were sold at total amount of 1,720.1 Million Baht. Total payment of coupon rate in 2019 were 77.40 Million Baht.

In accordance with the Regulations of Rights and Duty of Debenture Issuer and Debenture Holders, the Company is required to maintain Net Debt to Equity ratio at the rate of 2.5:1 at the end of the quarter and year end period. Details are defined as follows:

“Net Debt” refers to the total amount of debts shown in the consolidated financial statement of the debenture issuer/loaner, deducted by cash and cash equivalents.

“Equity” refers to the share equity of the debenture issuer/loaner as shown in the consolidated financial statement.

“cash and cash equivalents” refer to the total amount of cash and cash equivalents as shown in the consolidated financial statement of the debenture issuer/loaner.

Therefore, the Net Debt to Equity ratio (Net D/E ratio) in accordance with the Regulations of Rights and Duty of Debenture Issuer and Debenture Holders shall be as follows:

Net Debt to Equity ratio according to the consolidated financial statement was higher than indicated in the Regulations of Rights and Duty of Debenture Issuer and Debenture Holders. Therefore, the Company organized the meeting of debenture holders on March 16, 2020 in order to seek for approval on the following agendas:

1. Revision of the definition of “Net Debt” from “the total amount of debts shown in the consolidated financial statement of the debenture issuer/loaner, deducted by cash and cash equivalents” to “the total liabilities only with the interest bearing debt shown in the consolidated financial statement of the debenture issuer/loaner, deducted by cash and cash equivalents”.

2. Revision of the Net Debt to Equity ratio from the rate from 2.5:1 to 2.25:1 The meeting of debenture holders approved the revision in the definition of “Net Debt” and Net Debt to Equity ratio as follows:

During the year 2019, the Company did not issue or offer any additional debentures.

NWR-SBCC Joint Venture

On March 28, 2017, the Central Bankruptcy Court issued a definitive custodial order to Saraburi Coal Co., Ltd. (“Saraburi”), a joint venture under NWR - SBCC Joint Venture Agreement with 50 percent shareholding proportion to carry out the excavation and transportation of soil and coal at the Mae Moh Mine of the Electricity Generating Authority of Thailand in Lampang Province. The absolute custody ordered by the Central Bankruptcy Court was considered that Saraburi in breach of the Joint Venture Agreement. The Company exercised its rights under the Joint Venture Agreement to terminate the duty of Saraburi from the NWR-SBCC Joint Venture (“Joint Venture”). Subsequently, on January 15, 2018, the court ordered the bankruptcy of Saraburi.

On May 8, 2017, the Company submitted a written letter to the official receiver of Saraburi to cancel the duty of Saraburi in the Joint Venture. As a results, roles, rights and duty of Saraburi according to the Joint Venture Agreement ended and the Company has a right and duty according to Joint Venture Agreement to control and operate until the work is completed, as scheduled in March 23, 2018. The results of Saraburi’s lawsuit and the exercise of the Company’s rights did not change the Company’ shareholding ratio in the Joint Venture and did not affect the project operation with the Electricity Generating Authority of Thailand.

Currently, the project has already been completed. All machineries and equipment used for this project were sold. The Company is filling request to the officer receiver for termination of the Joint Venture and requesting for appointment of a liquidator.