Operating Performance

The overall Thai economy is estimated to have grown at 3.8% in 2017. The main contributors came from the export of goods and services which continued to improve in the second half of the year, while private investment was likely to recover significantly in the latter part of the year, especially the investment in automotive machinery and equipment. The investments in the public sector are likely to slow down as investment disbursement under the additional 2017 budget are relatively slow.

The PC market continues to decline but computer and software services are growing, which is in line with the Company’s strategy and the Company’s focus on high-quality products. However, the Company has lost revenue from major projects in the financial and medical services sector since 2016. As a result, in 2017, the Company had revenue from sales of goods and services of 7,395 million baht, a decrease of 3% and down by 7% from the Solution Integration Group (SIG). And company’s strategy is to sell the item, thus the company’s gross profit margin increased. The gross profit margin was 15.9%, an increase from the previous year’s gross profit margin of 14.2% and the net profit was 235 million baht, an increase of 25%.

– Revenue

The Company has revenue from the sale of products and services divided into:

  • Enterprise Systems Group (ESG): Revenue was 2,560 million baht or 34%, an increase of 4% from the previous year in a sale of middle-sized PC’s and large-sized servers due to the Company focusing on the sales of higher standard products.
  • Solution Integration Group (SIG): Revenue was 2,841 million baht or 38%, a decrease of 7% from the previous year due to the fact the Company had previously had large projects with financial institutes and medical service groups. Therefore, the income derived from network system sales, distribution of application, software and infrastructure software has relatively decreased. The sale of license software has, however, increased.
  • Digital Printing Group (DPG): Revenue was 1,994 million baht or 27%, a decrease of 7% from the previous year as the customers turn to rent a printer at a cost per sheet. The sales of printer supplies have thus reduced.

The gross profit margin has increased from 14.2% in 2016 to 15.9% in 2017 as a result of a sales strategy adjustment to focus on selling products with a higher standard and to sell office supplies under a long-term sales contract.

– Expenses

The Company’s expenses consist of:

  • Sales and administrative expenses increased from last year by 39 million baht or 12.3% compared to the previous year with ratio of 11.3% in 2016. The main increase in expenditure was the expense relating to employees,including depreciation and amortization due to the Company purchasing additional computers and devices to enhance the efficiency in customer service.
  • The Cost of Finance was decreased from the previous year by 4 million baht. When compared to the revenue from the sale of products and services in 2017 at 0.2% which was close to the 0.3% in 2016.
  • The corporate tax increased by 17 million baht due to an increase in the profit before tax in 2017. When compared to the revenue from the sales of products and services in 2017, this is a 0.8% increase compared to 0.6% in 2016.

As a result, the Company generated a net profit of 235 million baht. This compares to 188 million baht in 2016, an increase of 47 million baht or 25% due to an increase of gross profit margin at 94 million baht which was more than the increased expenditures.

The Company had a profitability ratio of 3.2% (increasing from the previous year at 2.4%). The equity ratio has increased from the previous year at 14% compared to 11.8% in previous year.

Financial Status

– Assets

As at the end of year 2017, the Company had total assets of 3,156 million baht, an increase of 19 million baht from year 2016. The total assets consisted of the current assets of 2,178 million baht or 69% of the total assets, and non-current assets of 978 million baht or 31% of the total assets. The main reasons for the asset decrease were as follows:

  • The current assets of 2,178 million baht increased by 120 million baht derived from a current investment of 274 million baht, an increase in fixed deposited in the fixed account of 18 million baht, an increase in capital invested by the Company within market fund of 257 million baht, an increase in current portion of financial leases receivable of 59 million baht, a decrease in cash and equivalent to 111 million baht, a decrease in accounts receivable and other receivables after allowance for doubtful accounts of 46 million baht, a decrease in inventory of 44 million baht and a decrease in other current assets of 11 million baht.

– Trade and Other Accounts Receivables

The Company’s trade and other receivables after deduction of estimated bad debt at the end of year 2017 were 834 million baht, a decrease of 90 million baht from last year. Most of the account receivable (67%) have not been paid under the credit terms and 33% are in the process of debt collection. There was accounts receivable with unpaid debts in excess of 1 year, amounting to 0.2 million baht and this category of debtors is under the legal proceeding for the amount of 41 million baht which are the debtors who are paying the debt installation and under the process of debt collection. The Company estimated the allowance for doubtful account by considering each debtor under the Company’s receivable account criteria. In 2017, the Company estimated the allowance for doubtful accounts of 41 million baht or 5% of total receivable accounts. The Company has an average debt collection period of 46 days from sales in 2017.

Other account receivables at the end of year 2017 were 175 million baht, an increase of 44 million baht, mainly from the accrued income, prepaid expenses and so on.

– Inventory

The Company’s inventory after deduction of allowance obsolete goods at the end of year 2017 was 376 million baht, a decrease of 44 million baht. The Company’s inventories were divided into finished goods, work in progress supplies and office supplies. The average day sale operation was 21 days in accordance with the management policy to control and prevent the Company’s risks.

The non-current assets were 978 million baht, a decrease of 101 million baht. This is derived from a decrease in deposit for a guarantee of 102 million baht, a decrease in (net) land, buildings and equipment by 70 million baht from the depreciation caused by solar cells installed in the previous year and investments in computer and equipment for customer service. The Company has a Return On Fixed Assets by 53.5%. An intangible asset of the Company was decreased by 3 million baht, an increase in deferred tax by 0.5 million baht, a reduction in investments in associated company by 2 million baht from selling Metrosoft Co., Ltd., and withholding tax increased by 28 million baht.

Liquidity

– Cash Flow

As at 31 December 2017, the Company had net cash and the equivalent decreased by 111 million baht which gives total of 68 million baht. The main reasons were as follows:

  • The net cash received from the Company’s operating result was 225 million baht. This was mainly result from profit before income tax and after deduction of costs not related to cash was 428 million baht, the change in account receivables and other receivables at 42 million baht, an inventory decrease of 35 million baht, other current assets decreasing by 11 million baht, finance lease receivables increasing by 106 million baht, account payables and others payables decreasing by 83 million baht, other current liability decreasing by 16 million baht and deposit and guarantee decreasing by 5 million baht. As a result, the Company received cash of 305 million baht. The employees benefits paid 2 million baht. The Company paid net tax of 78 million baht, thus, giving net cash from operations of 225 million baht.
  • Net cash spent on the Company’s investment activity was 190 million baht due to the fact the Company had decreased in deposits used as collateral by 62 million baht. Cash received from distribution of investments in associates was 1 million baht. The Company has cash paid for current investment of 234 million baht, had additional fixed assets of 30 million baht from investment in equipment, office supplies and furniture and received the interests of 10 million baht.
  • Net cash spent on financing activity was 146 million baht due to the Company had cash available for payment on bank overdrafts and short-term loans from financial institutions of 41 million, cash obtained from short-term loans from other companies of 65 million baht, cash received from sale and lease back contracts stood at 89 million baht. While long-term loans was decreased by 22 million baht, the Company has paid debts under the financial lease contract of 92 million baht. The Company also paid financial costs of 18 million baht and paid out dividends of 126 million baht.

– Significant Liquidation Ratio

As at 31 December 2017, the Company had a D/E ratio of 0.8 decreased from the figure in 2016. This resulted from the decreased liability from the bank overdraft and short-term loans from the other companies, other accounts payable and other payables. The Shareholder’s portion increased from the annual net profit. However, the Company’s total debt occurs from the normal business operation.

The debt service coverage ratio in 2017 was 0.8, decreasing from the figure in 2016. In 2017, the cash flow of the Company’s operation was 225 million baht due to a decrease in the operations and a decrease in accounts receivable and other receivables of 42 million baht. The inventory has decreased by 35 million baht. Other non-current assets were decreased by 11 million baht. The financial lease contract debts were decreased by 106 million baht. However, Accounts payable and others payables were decreased by 83 million baht and the other current liabilities were decreased by 16 million baht. The deposit and guarantee was decreased by 5 million baht and the employees benefits were decreased by 2 million baht. The Company paid back debts of 136 million baht, bought assets of 30 million baht and paid 126 million baht in dividends.

The Liquidity Ratio as of the end of year 2017 was equal to 1.9 times, which has increased from the previous year, due to the Company having collection period from 47 days to 46 days. On the contrary, the payment period was reduced from 46 days to 40 days, the average sales period was also reduced from 33 days to 21 days. The quick liability ratio as of the year end of 2017 was at 0.9 time which was decreased for 0.1 time from the figure of the year 2016, mainly from the decrease of accounts receivable and other receivables after allowance for doubtful accounts of 42 million baht. Additionally, the amount of accounts payable and other payables was decreased by 83 million baht.

Source of Funds

– Liability

The total liability at the year end of 2017 was 1,417 million baht, a decrease of 91 million baht from the previous year. The total debt consisted of the current liability of 1,150 million baht or 81% of the total debt and the non-current liability at 267 million baht or 19% of the total debt. The main reasons for the decrease in debt were as follows:

  • Current liabilities of 1,150 million baht, a decrease of 64 million baht, resulting from a decrease in accounts payable and other payables of 83 million baht. The Company had an account payable of 636 million baht, a decrease of 99 million baht. The Company had a repayment period of 40 days. The other account payable amount stood at 226 million baht, an increase of 16 million baht, consisting of accrued expenses, deposits and advances of cash received. the bank overdraft and short-term loans from other financial institutes decreased by 41 million baht, the short-term loans from other companies increased by 65 million baht, the long-term liabilities due within one year increased by 1 million baht, the long-term liabilities under financial lease contracts due within one year increased by 9 million baht, accrued corporate tax increased by 2 million baht, and other current liabilities decreased by 16 million baht.
  • Non-current liabilities of 267 million baht, a decrease of 27 million baht, resulting from a decrease in long-term loans of 26 million baht, a decrease of liabilities under financial lease contract by 13 million baht, the deposit and guarantee was decreased by 5 million baht. An increase in employee benefits obligations by 8 million baht, and an increase in liabilities on deferred tax by 8 million baht.

– Shareholder’s Equity

The Shareholder’s equity at the end of year 2017 was 1,739 million baht, an increase of 7% due to the net profit in 2017 was 235 million baht. The Company paid dividends in 2017 at the rate of 0.35 baht per share, totaling 126 million baht.

Committed Liability and Out-of-Balance Sheet Management

The Company engaged in lease contracts as follows:

  • Car lease contracts for 5 years which can be terminated at any time. As at 31 December 2017, the minimum future payment within one year was 6 million and 15 million baht to be paid after first year and within 5 years.

The Company has disclosed this information in the Note of Financial Statement, Clause 30 of financial statement year 2017.